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Selling Future Structured Settlement Payments For Less Than Half The Present Value Is Not ‘Fair and Reasonable’, Says New York Court

The proposed sale would involve an exchange of future structured settlement payments with a face value of $90,951 and a discounted present value of $71,729 – and a proposed purchase price of $32,652.

That was enough for the court to reject the sale.

The proposed purchase price “is less than half of the discount[ed] present value, and therefore, is not ‘fair and reasonable,’” said New York Supreme Court Justice Thomas Feinman earlier this month in an opinion captioned In the Matter of the Petition of Peachtree Settlement Funding, LLC (Miller), Index No. 1151/17, 2017 NYLJ LEXIS 1513, New York Law Journal Vol. 257/No. 114, Supreme Court, Nassau County, NY. (N.Y. Sup. Ct. June 6, 2017).

The matter was filed by proposed transferee Peachtree Settlement Funding, LLC, which invoked the New York Structured Settlement Protection Act to request trial court court approval of the sale of future payment rights.

Under the New York SSPA – as with all 49 state SSPAs – a sale of future structured settlement payment rights is not effective unless the proposed purchaser (Peachtree, in this matter) provides the person entitled to received the payments (Maurice Miller was the payee in the matter before Justice Feinman) with a detailed disclosure statement, and then also complies with the other SSPA requirements, including that a court review the transfer and decide whether to approve it.

Under the New York SSPA, a court can approve the transfer only if it can find that the transfer is in the payee’s best interest and is “fair and reasonable.”

In the Miller matter, Justice Feinman went on to conclude that the transfer was also not in the best interests of the payee:

Miller avers that he is currently 37 years old, single and would like to use the proceeds of the transaction to purchase a home, to add to the lump sum he is already receiving from the structured settlement, and plans to use the remainder for closing costs and taxes.

However, Miller, does not provide any documentation to substantiate his submissions.  More importantly, this Court is not only concerned that the transaction is not fair or reasonable as Miller will be receiving less than half of the discounted value, but is also concerned that this is Miller’s fifth application for similar relief, and Miller has waived his right to consult with an independent professional.  As already provided . . . the proposed transfer of structured settlement payments were designed to preserve the Miller’s long-term financial security, and Miller’s waiver of consulting with an independent professional leaves this Court with the impression that he does not fully appreciate the consequences of the transfer.

Justice Feinman denied the motion requesting court approval of the transfer, and dismissed Peachtree’s petition.

The full opinion is available from the New York Law Journal (subscription required) here.

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