Pension Worldwide Seeks Debt Relief in Chapter 11 Bankruptcy
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Pension Worldwide Seeks Debt Relief in Chapter 11 Bankruptcy

January 21, 2013


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Pension Worldwide Inc., a historic company that once handled a broad range of securities trades for brokerages across the United States, filed for bankruptcy protection last week in an effort to restructure its debt load, according to The Wall Street Journal.

Sources indicate that Pension Worldwide has been in financial decline for years, and that its money troubles were exacerbated by the financial crisis that struck in 2008.

For years, the Dallas-based company gathered much of its profits from interest on client money that was held in its coffers. But when benchmark interest rates fell to historically low levels in 2008, the client money quickly dried up.

This was a rude awakening for Pension Worldwide, which used to serve as one of the largest clearinghouses for stock trades, in addition to running a successful futures brokerage, according to sources.

And the company’s bankruptcy could have broad repercussions. Sources note that eight of the company’s nine affiliates also initiated a bankruptcy filing in Delaware at the same time.

Sources say Pension Worldwide told the bankruptcy court in its initial filing that it holds between $100 million and $500 million in both assets and liabilities, which is all the detail the court requires in the initial bankruptcy paperwork.

According to The Wall Street Journal, the company’s road to bankruptcy may have been hastened by a poor financial decision. Sources indicate that the company disclosed last year that it held $42.6 million in illiquid bonds that had been issued by a horse-racing operation in Texas.

The bonds were being held as collateral, and may not have raised many eyebrows had it not been revealed that the owner of the horse track had close ties with one of Pension Worldwide’s board members.

The revelation reportedly led some investors to question the governance tactics of the company’s board, as well as its risk management policies. And the investors’ concerns led to a dramatic drop in the company’s fortunes.

Sources say shares of the firm lost 50 percent of their value over a single 48-hour period in May 2011. The loss in share value triggered a quick sale of some of the company’s international subsidiaries, as well as mergers of some of Pension Worldwide’s domestic outlets.

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