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Too Much Was Missing from Structured Settlement Factoring Papers, Said Court

A petition for court approval of a transfer of structured settlement payment rights is typically commenced by a petition that includes copies of the disclosure statement, the transfer agreement, a list of the payee’s dependents, and often quite a few other documents.

But sometimes, courts look at the documentation and focus on what’s missing.

Such was the case in a recent New York Structured Settlement Protection Act (SSPA) opinion.

In the Matter of J.G. Wentworth Originations, L.L.C. (Shaw), Index No.: 007305/15 (N.Y. Sup. Ct. Sept. 24, 2015), involved a proposed transfer of payments with just over $1 million in discounted present value, in exchange for a lump sum payment of $720,000.  But what was missing from the petition papers were a number of salient details.  Said the court:

  • “No details have ben provided as to how the structured settlement came about.”
  • “There is no indication in the record before the Court whether Mr. Shaw is to receive the balance of $3,500.00 from the monthly payments of $10,000.00 or whether he transferred his rights to any of the remaining payments which were to be paid to him from August 15, 2015 and ending on January 15, 2032.”
  • “[T]here is no indication as to whether Mr. Shaw received the payments which were supposed to be paid to him pursuant to the Structured Settlement Annuity Contract from February 15, 2012 to August 15, 2015 or whether he transferred his rights to those payments.”
  • “No tax returns, 1099’s, W-2’s, patsy’s or other information is provided to indicate how Mr. Shaw supports himself other than from the payments from the structured settlement.”
  • “Mr. Shaw does not indicate who he lives with or if anyone else assists him financially.”
  • “There are no documents or evidence provided in support of the Petition which identifies the home which Mr. Shaw wishes to purchase.”
  • “No details are provided as to the nature of the startup restaurant Mr. Shaw wishes to invest in or what ‘Sparkling Delight’ is.”
  • “[N]o business plan or details as to the nature of the businesses are provided for which Mr. Shaw proposes to invest $420,000.00.”
  • “No other documentation is submitted to substantiate the claim for any needs or desires to spend any of the money [he]  would receive.”
  • While the New York SSPA requires that the petition include “a statement setting forth whether there have been any previous transfers or applications for transfer . . . and giving details of all such transfers or applications”, and “[a]lthough a prior petition was filed . . . and was declined for procedural reasons,” the Court pointed out that there appeared to be no statement concerning the prior application.
  • The payee “does not disclose any other household income or any other sources of financial income” – and “[w]ithout this information, the Court cannot determine that the loss of the future payments wouldn’t jeopardize the Respondent’s financial security as well as the security of his son.”

Unsurprisingly, the court denied the request for court approval of the proposed transfer.

 

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