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

RIA moves: Carson Group marks deal milestone as Simon Quick continues slow-growth strategy
RIA moves: Carson Group marks deal milestone as Simon Quick continues slow-growth strategy

Carson has fully acquired another firm in Florida, while Simon Quick Advisors finds its third perfect-fit partner in a Las Vegas-based boutique.

FINRA penalizes another broker dealer for social media miscues
FINRA penalizes another broker dealer for social media miscues

FINRA has been focused on firms and their use of social media for several years.

How much do affluent clients love fee-based planning?
How much do affluent clients love fee-based planning?

The model has surged in popularity thanks to its fiduciary appeal, but the show is far from over for no-fee and commission-based arrangements.

Wall Street rush into Vanguard-style funds draws concerns
Wall Street rush into Vanguard-style funds draws concerns

Asset managers filing to launch dual share-class mutual funds, creating an ETF sleeve for existing strategies, could end up eroding key benefits of the wrapper.

Fintech bytes: Zocks lands Commonwealth partnership, Visory powers cybersecurity for Modern Wealth
Fintech bytes: Zocks lands Commonwealth partnership, Visory powers cybersecurity for Modern Wealth

The two wealth tech firms are continuing to expand their reach among firms as they support advisor productivity and client data protection.

SPONSORED Beyond the dashboard: Making wealth tech human

How intelliflo aims to solve advisors' top tech headaches—without sacrificing the personal touch clients crave

SPONSORED The evolution of private credit

From direct lending to asset-based finance to commercial real estate debt.