Luke Lee, the founder and CEO of bankrupt Inspired Healthcare Capital, is under the microscope as creditors seek scores of documents related to the dozens of senior living facilities the company financed as well as personal financial information about Lee.
Inspired Healthcare Capital collapsed this year and filed in February for chapter 11 bankruptcy.
The group of creditors on Wednesday filed a document request in U.S. Bankruptcy Court in Fort Worth, Texas, and requested 25 groups of documents, many of which are related to fees and financial information of the business.
“Produce all documents reflecting compensation, reimbursements, advances, distributions, bonuses, commissions, fees, or other payments made by any debtor to” Lee or his benefit, is one request, according to the court filing.
As it relates to the various Inspired Healthcare properties, creditors also want documents linked to the various entities officers, directors, organizational charts and any working agreements.
An attorney for Lee, Daniel F.X. Geoghan, did not return a call Thursday morning to comment.
Lee launched the company in 2016. It eventually issued $1.2 billion – now of unknown worth - high-risk investments, including private placements and Delaware Statutory Trusts, which were sold by independent broker-dealers and their financial advisors to fund the assisted living developer.
The case has caught the eye of the financial advice industry.
Broker-dealers that sold the now defunct private securities deals backed by Inspired Healthcare Capital generated more than $100 million in fees and commissions for securities that no longer issue distributions – think dividends - to clients.
Lee and Inspired Healthcare Capital creditors are already at odds over insurance related to the bankruptcy.
Lee in June filed a motion to get access to “Directors & Office” insurance, which totals $10 million, according to court documents.
Inspired Healthcare’s “committee of unsecured creditors” then filed its objection claiming that the proceeds of such directors and officers insurance policies are property of the debtor’s estate, as well as other claims.
Fights for money from troubled or bankrupt investments such as Inspired Healthcare can prove particularly troubling for the parties involved.
Last year, it was revealed that GPB Capital Holdings, another private-placement financed deal gone south, underwrote the legal costs of its two senior executives and convicted felons, founder David Gentile and broker-dealer chief Jeff Schneider, to the amount of $75 million.
The Securities and Exchange Commission last year “initiated a formal investigation into the company,” according to court filings.
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