In Time Frame Leading Up to Latest Bankruptcy, J.G. Wentworth Says It Faced Increased Competition in Settlement Factoring Business

In Time Frame Leading Up to Latest Bankruptcy, J.G. Wentworth Says It Faced Increased Competition in Settlement Factoring Business

As described in a blog post here, J.G. Wentworth last month filed for its second bankruptcy in less than a decade.

More recently, J.G. Wentworth, in filings with the bankruptcy court, said that in recent years it faced increased competition among companies that seek to purchase future structured settlement payment rights.

In a disclosure statement filed in the bankruptcy proceeding, the company said that, in existing to existing competitors, “the Company faced increased competition from numerous smaller entrants to the market due to a prolonged period of low interest rates and low barriers to entry in the industry (e.g., low cost of capital and ease of online lead generation).”

In describing the business in its bankruptcy filing, J.G. Wentworth inaccurately conflated the primary market, whereby insurers sell annuities to fund and establish structured settlements, with the J.G. Wentworth’s business in the secondary market for structured settlement payment rights, where companies purchase payment rights of already-established structured settlements.

Fortunately, at least some news reports – such as this one from the Wall Street Journal (J.G. Wentworth Files For Chapter 11 Bankruptcy Protection – behind paywall) – refer to the “structured settlement payments purchasing” industry or a similar term.

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