The parent company of Lexington Law, which filed for bankruptcy protection earlier this week, is planning to auction off its assets and has laid off more than 75% of its employees, according to published reports.
The bankruptcy court yesterday approved a $12 million loan to PGX Holdings, which will be used to auction off the company’s assets. The assets will be sold in two separate sales, according to a report in The Wall Street Journal. Current equity holders of Lexington Law, which generated most of PGX’s sales and had the company’s largest number of customers, plan to take over the credit repair provider, according to the report.
The company, facing a $3 billion enforcement order from the Consumer Financial Protection Bureau, said it only had $4 million of cash on hand and expected to run out of money by the end of the month.
More than 900 employees of the company have been laid off, which has led to a separate class-action lawsuit. Only 300 employees remain at the company. Progrexion has shut down 80% of its operations. While the company served 2.1 million customers in the 12-month period ending March 31, it entered bankruptcy protection with only 130,000 customers, according to the company’s filings with the bankruptcy court.
The CFPB has yet to issue a comment about the bankruptcy filing and any potential impact on its enforcement action.
The company has more than 100,000 creditors and is unable to make payments on $400 million of loans it has taken out.
