Last Monday, a Delaware bankruptcy court allowed JGW Holdco LLC and affiliates J.G. Wentworth LLC and J.G. Wentworth Inc. to enter Chapter 11 bankruptcy protection after the company encountered liquidity problems amid a tightening credit market.

The three Bryn Mawr, Pa.-based companies buy and service structured settlements, as well as small-face-value life settlements. J.G. Wentworth has also securitized these settlements.

As funding dried up during the credit crunch, J.G. Wentworth had difficulties buying up these assets. The company is now reorganizing its business per the bankruptcy arrangement.

When a life settlement buyer files for bankruptcy, insured individuals who have already sold off their policies are often the ones who end up least injured, as they have already collected their lump sum. However, insurance policies and annuities in the process of being sold may be up in the air.

Source: InvestmentNews