Facing the possibility of a $3 billion claim from the Consumer Financial Protection Bureau, the parent company of Lexington Law and CreditRepair.com filed for Chapter 11 bankruptcy protection yesterday.
A copy of the filing, filed in the Bankruptcy Court for the District of Delaware, can be accessed by clicking here.
PGX Holdings operates one of the nation’s largest credit repair companies. The debtors generated $388 million in combined revenue in 2022, according to one of the filings. The CFPB filed suit back in 2019 against a number of companies operated by PGX Holdings for violating the Telemarketing Sales Rule by engaging in “bait advertising” and requesting or receiving payments up front for credit repair services. In April, the CFPB filed a motion asking the judge to assess $3.1 billion in penalties — in the form of redress to consumers and fines — arguing that the total equals the amount that the companies “took” from 4 million consumers.
Along with the parent company, 12 affiliates were included in the filing:
- Credit Repair UK, Inc.
- Credit.com, Inc.
- Creditrepair.com Holdings, Inc.
- Creditrepair.com, Inc.
- eFolks Holdings, Inc.
- eFolks, LLC
- John C. Heath, Attorney at Law PC
- Progrexion ASG, Inc.
- Progrexion Holdings, Inc.
- Progrexion IP, Inc.
- Progrexion Marketing, Inc.
- Progrexion Teleservices, Inc.
The parent company is also facing a class-action lawsuit in Utah for violating the Worker Adjustment and Retraining Notification (WARN) Act after it laid off 900 employees without providing the proper amount of notice. A copy of the complaint in that suit can be accessed by clicking here.
In a statement, the company said it plans to “emerge as a stronger and even more determined organization.” It said it will continue operating under the ordinary course of business and intends to fully pay suppliers and vendors.
“This move will ensure that we set a course for a future filled with advocacy that will lead to more Americans securing financing on the most favorable terms available to them,” said Chad Wallace, CEO of Progrexion, in a statement
