Former Top Lender, Wingspan Portolfio Advisors, Files Chapter 7 Bankruptcy

Wingspan Portfolio Advisors, formerly an Inc. 500 fastest-growing company, recently announced plans to file for Chapter 7 bankruptcy protection. In the Chapter 7 filing document, the company listed $12.07 million in liabilities and $1.24 million in assets.

Wingspan falls into debt

Upon opening in 2008, Wingspan experienced a meteoric rise as a high touch special servicer. The company grew exponentially after receiving a cash injection of $2.5 million from JAM Equity Partners, LLC. Wingspan then received a boost through default servicing contracts with Bank of America and several other major institutions, prompting it to acquire the JPMorgan Chase mortgage servicing facility in Florida, the JPMorgan Chase’s customer service center in Monroe, Louisiana, and Dimont & Associates, a hazard insurance claims management company.

However, following the company’s rapid growth during the housing foreclosure crisis, the mortgage lender became saddled with debt following two years of losses. According to bankruptcy papers, the company lost more than $47 million between 2013 and 2015. Wingspan also claimed that its liabilities include $2.144 million to creditors holding secured claims, $2.36 million to creditors holding unsecured priority claims, and $7.56 million to creditors holding unsecured non-priority claims.

As the industry shifted out of the default crisis, Wingspan moved to diversify its service offering, which led to significant changes.

Series of poor developments

The company’s rapid decline came after several disastrous developments. The first of which involved the removal of founder and CEO Steve Horne in 2014. This move transitioned Horne to a senior advisor role after the company’s poor performance in 2014.

Shortly after this announcement, Wingspan received a multi-million dollar cash infusion from its stockholder investor group to purchase Dimont & Associates. This decision proved fatal for the company because the transaction required Wingspan to take on mezzanine debt. Dimont was financially insolvent, and divested from the company following the transaction to fulfill its debt obligations from the acquisition. As a result, Wingspan’s senior debt holders began to pressure the company after it failed to make the first round of debt payments.

With the company’s poor financial status, Wingspan began several rounds of layoffs at its facilities. This included 150 of its 400 employees at JPMorgan Chase in Florida and hundred employees at facilities in Louisiana and Texas.

The company’s bankruptcy proceedings

Chief United States Bankruptcy Judge Brenda Rhodes ordered that the company submit an alphabetized list of creditors, otherwise the case would be dismissed. Furthermore, Wingspan did not specifically list its creditors, leaving uncertainty as to how the company accrued $10.833 million in liabilities.

Are you a creditor in a bankruptcy?  Have you been sued by a bankrupt?  If you have any questions about your rights, please contact me, Joel Glucksman, at 201-806-3364.