KC-area payday lenders face involuntary bankruptcy
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Lawsuits against a payday lending operation originating out of Mission Hills continue to head down a highly unusual path that probably will keep local lawyers exceptionally busy.
A company called NorthRock LLC has teamed up with CoreFirst Bank & Trust and a company called NetFinance LLC to force a network of payday lenders under the umbrella of a company called LTS Management Services — along with its two owners, Del Kimball of Mission Hills and Sam Furseth of Oklahoma City — into an involuntary bankruptcy proceeding. LTS and its owners already have had about $55 million in judgments issued against them in the past year, and now the companies owed the money are in bankruptcy court seeking to get paid.
Involuntary cases are extremely rare — they account for only about 5 percent of all bankruptcies. Even more unusual is that the U.S. Bankruptcy Court for the Western District of Missouri recently ordered that the cases against LTS, Kimball and Furseth be combined into a single case. It’s rare because there are probably only a handful of cases ever filed that have two different individual business owners involved the same bankruptcy case. Kimball and Furseth didn’t fight the motion to combine their involuntary bankruptcy proceedings.
Kimball, Furseth and LTS are already on the
hook for about $55 million in Missouri alone, but the overall liability they face probably will grow now that the cases were combined and the court opened it up to other creditors. The deadline to join the suit is Sept. 18.
Kimball, Furseth and LTS are also under a federal order to cough up records detailing their assets. So once the deadlines hit, a better picture of the case should emerge.
LTS Management’s monetary problems have been well publicized. The company is just one of about a dozen entities Kimball and Furseth set up to make payday loans over the Internet. The operation borrowed money from NorthRock to make the loans. However, its operations suffered a crippling blow when banking regulators went after online payday lending services that ran afoul of state laws. The U.S. Justice Department launched an effort called Operation Choke Point that targeted the payment processing services that online payday lending operations relied on.
Facing difficulty processing payments, LTS and its similar entities were basically put out of business. It meant they couldn’t pay back loans to companies such as NorthRock, NetFinance and CoreFirst Bank & Trust.
Kimball, Furseth and LTS also have about $15 million in judgments against them in Johnson County, and they face a more than $200,000 suit from American Express, as well as a $575,000 suit in Colorado for not paying their lobbyist Chesapeake Enterprises.
Category: Payday loans