Federal judge approves RCAP bankruptcy plan

Federal judge approves RCAP bankruptcy plan
Decision paves way for its biggest asset, Cetera Financial Group, to emerge as a privately held company.
JUL 11, 2016
A federal judge has approved RCS Capital Corp.'s bankruptcy plan, paving the way for its Cetera Financial Group, its largest asset, to emerge as a privately held company. U.S. bankruptcy judge Mary Walrath in Wilmington, Del., issued the order Thursday, confirming the Chapter 11 bankruptcy plan. The main asset of RCS Capital, or RCAP, is the Cetera network of 10 broker-dealers that are home to 9,000 financial advisers. As the RCAP bankruptcy is drawing to a conclusion, Cetera is undergoing a broad restructuring and beginning to consolidate some of those firms into others. The new owners of the revamped company are its debt holders, which include such financial institutions as Fortress Investment Group, Carlyle Investment Management and Eaton Vance Management. Cetera's CEO Larry Roth last month said those institutions have indicated they will be in the business for the long haul. "We're excited by this final step toward the company's successful exit from the Chapter 11 process, and its emergence as a Cetera-only organization that is privately owned, independently managed, and well-positioned for long-term success in serving financial advisers and financial institutions,” David Orlofsky, chief restructuring officer of RCAP and senior managing director of Zolfo Cooper, said in a statement. “We expect formal emergence from the restructuring process to follow soon, at which time Cetera will have further public comment.” (Related read: Former AR Global REIT director cries foul over potential merger) RCAP filed for bankruptcy protection at the end of January. RCAP was bloated with hundreds of millions of dollars in debt after a broker-dealer buying binge by its former controlling shareholder, Nicholas Schorsch, who is no longer involved in running the company. The purpose of RCAP's Chapter 11 bankruptcy was to improve the company's balance sheet, reduce debt and dump certain non-brokerage assets.

Latest News

Goldman Sachs succession plan: John Waldron set to take the top job
Goldman Sachs succession plan: John Waldron set to take the top job

Goldman's president and COO is expected to replace David Solomon as CEO as soon as 2027, ending a near-decade at the firm's helm.

Where a client's parent lives may decide who pays for the nursing home
Where a client's parent lives may decide who pays for the nursing home

A state-by-state Medicaid report card, federal cuts starting in January and a home-equity cap due in 2028 are pushing a program most affluent families ignore into the planning conversation.

Raymond James launches guided portfolios for high-net-worth advisor market
Raymond James launches guided portfolios for high-net-worth advisor market

New model blends public and private markets as demand for alternatives among wealthy clients accelerates.

SEC fines Zoe Financial $450K over undisclosed referral conflict
SEC fines Zoe Financial $450K over undisclosed referral conflict

Salespeople at the firm often went beyond the matching algorithm to recommend network advisors on its Zoe Wealth platform, according to the regulator.

Senate vote on NIL bill could reshape college athletes' paydays
Senate vote on NIL bill could reshape college athletes' paydays

The Protect College Sports Act would cap school payments and codify NIL rights, with implications for advisors guiding young athletes.

SPONSORED In the Age of AI, Trust Becomes the Advisor's Greatest Asset

As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor

SPONSORED Direct indexing webinar targets tax-loss harvesting amid market swings

Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains