JG Wentworth and Peachtree Merger: The impact on Annuitants wishing to sell their Structured Settlement
On July 12, 2011, J.G. Wentworth and Peachtree Financial Solutions simultaneously issued a press release announcing that they had completed a transaction allowing them to operate under a single company, JGWPT. The merger has made a significant impact within the structured settlement and annuity factoring industry.
"This is a great opportunity for both companies and their respective customers," David Miller, CEO of J.G. Wentworth stated. "It brings together two strong specialty finance companies who will continue to operate independently."
In sharp contrast, 155 of Peachtree employees that worked out of its Boynton Beach, FL office (that's 90% of their workforce there) were laid off. The remaining 10% were relocated to J.G. Wentworth's current headquarters in Radnor, PA. Peachtree's former CEO Jim Terlizzi has been relegated to a seat on the board of directors. These moves indicate, in our view, that in spite of JGWPT's attempts to represent this union as a true merger of equals, the reality is this is a takeover by J.G. Wentworth of Peachtree.
On a strategic level, these decisions were motivated, we believe, by at least two reasons—to protect itself and to eliminate a fierce competitor. Firstly, J.G. Wentworth had filed for bankruptcy only two years prior to the merger. Following the 2008 credit crunch, it was unable to cash in its securitizations, and on May 19, 2009, the major buyer of structured settlements and annuities filed three Chapter 11 petitions to a bankruptcy court in Delaware. The company acted quickly, but a fair assessment would suggest that it was in crisis mode. According to the Dow Jones Daily Bankruptcy Review, as of June 2nd, 2009, "[t]he Bryn Mawr, PA. company owed senior lenders nearly $371 million." During the Chapter 11 restructuring, it was believed by financial advisors that J.G. Wentworth "[was] worth $100 to $150 million as a going concern. If forced to liquidate, however, J.G. Wentworth would be worth less than $7 million."
In our view, the decision to merge with Peachtree was not only made to save itself. But by merging with Peachtree, J.G. Wentworth has essentially swallowed up one of its main competitors and regained much of its market share lost during its bankruptcy work out. Moreover, the merger, in our view, significantly reduces the competition and therefore the choices that annuitants have to get the most competitive price for their annuity assets. This is in stark contrast to the message that we think JGW's CEO would like people to believe.
Today, it is believed that JGWPT controls about 65% of the structured settlement secondary industry. Being the largest and most recognized group in the industry, they have taken the liberty of repeatedly giving what we consider shockingly low offers to annuitants who believe they have no alternative options, and accept these low-ball prices without shopping. A small number of more knowledgeable annuitants do seek price quotes from other factoring companies and, indeed, can do much better. In those cases we believe it is JGWPT's policy to price match or offer a minimally higher price but only if forced to do so.
At Structured Settlement-Quotes, we think JGWPT's policy is wrong and unfair to annuitants. Structured Settlement-Quotes believes annuitants should shop around to get the best price from various companies rather than just settling on the first offer they receive. We do that shopping for them so as to get annuitants more money for their structured settlement assets.
At Structured Settlement-Quotes only its highest guaranteed offers are provided without hassle or haggling.
Give us a try and see for yourself.
1. "J.G. Wentworth and Peachtree Financial Solutions Seal Deal - Will continue to operate independently under new holding company", jgwentworth.com Press Releases, 7/12/11 (Last accessed 4/11/12). http://www.jgwentworth.com/about/news/press/detail.aspx?i=68
2. Dow Jones & Co. Inc, "J.G. Wentworth Cleared to Emerge from Chapter 11 Bankruptcy," The Wall Street Journal Daily Bankruptcy Review, 02 June 2009 (last accessed April 8, 2012) https://www.fis.dowjones.com/WebBlogs.aspx?aid=DJFDBR0020090602e562000dx&ProductIDFromApplication=&r=wsjblog&s=djfdbr
1. http://www.moodys.com/research/Moodys-assigns-the-Corporate-Family-Rating-of-B3-to-JGWPT--PR_227917
2. http://www.palmbeachpost.com/money/real-estate/boynton-firm-to-offer-reverse-mortgages-1808676.html
3. http://online.wsj.com/article/SB888362142709833500.html
4. https://www.fis.dowjones.com/WebBlogs.aspx?aid=DJFDBR0020090602e562000dx&ProductIDFromApplication=&r=wsjblog&s=djfdbr
5. http://online.wsj.com/article/SB888362142709833500.html#articleTabs%3Darticle
6. http://www.reuters.com/article/2009/05/19/jgwentworth-bankruptcy-idUSN1944239020090519
7. http://www.moodys.com/research/Moodys-assigns-definitive-ratings-to-securitization-of-structured-settlements-sponsored--PR_220578
8. http://articles.sun-sentinel.com/2011-08-24/business/fl-peachtree-layoffs-20110824_1_lump-sum-lottery-winnings-life-insurance-settlement 9. http://en.wikipedia.org/wiki/Mergers_and_acquisitions
10. http://www.jgwentworth.com/about/news/press/detail.aspx?i=68
11. http://peachtreefinancial.com/company/press-releases/457
12. http://www.prnewswire.com/news-releases/jg-wentworth-and-peachtree-financial-solutions-seal-deal-125511438.html