The company seeks to reorganize through the bankruptcy filings, prompted by an enforcement action from the Consumer Financial Protection Bureau.
06/07/2023 12:55 P.M.
1.5 minute read
PGX Holdings Inc., the parent company for Lexington Law, has filed for Chapter 11 protection after a Consumer Financial Protection Bureau enforcement action caused a change in its business model and reduction in revenue, according to a news release from Lexington Law.
“This announcement follows a years-long legal battle with the Consumer Financial Protection Bureau over the interpretation of a Federal Trade Commission rule covering the timing of billing for credit repair services engaged by inbound phone calls,” the news release states.
In the Utah federal court case, CFPB v. Progrexion Marketing, Inc., No. 2:19-CV-00298-BSJ, 2023 WL 2548008 (D. Utah Mar. 10, 2023), CFPB sued the credit repair organization alleging it violated the advance-fee provision of the Telemarketing Sales Rule, ACA International previously reported.
Lexington Law stopped the billing practices that were the subject of the litigation, it reports in the news release, noting, “The sudden change in business model has led to a dramatic reduction in revenue, which in turn has necessitated extensive layoffs that has had an impact on its employee base. This abrupt disruption has created Lexington’s move towards restructuring, a move that will allow it to continue advocating for consumers that need the professional assistance the Firm can provide.”
Lexington Law, along with certain affiliated debtors, filed several customary motions with the U.S. Bankruptcy Court “seeking authorization to support its services to its clients and operations during the court-supervised bankruptcy process, including the continued payment of employee wages and benefits without interruption and the payment to vendors and suppliers on normal terms for goods and services provided in the post-petition period.”
A first-day hearing on the motions was held June 6. Learn more about the bankruptcy filings here.
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