ST. LOUIS (CN) – The brothers who own U.S. Fidelis will pay the company $10.5 million and may surrender an additional $10 million to settle claims that they looted the bankrupt company at the expense of creditors and consumers. The proposed settlement, filed in St. Louis Bankruptcy Court, would allow the wives of Darain and Cory Atkinson to keep $500,000 each, along with jewelry, clothes and household items.
The brothers would be left with very little. The wives will not be allowed to turn over the property to their husbands, under terms of the settlement.
U.S. Fidelis would not seek to recover $1.1 million the brothers have paid to retain criminal defense attorneys, according to the settlement. The Atkinsons have not been charged with any crime.
U.S. Fidelis was the nation’s No.1 seller of auto-service contracts. The company began a series of mass layoffs in December. Some attorneys general have accused it of fraud and illegal telemarketing.
The Atkinsons assets include 10 residential properties, including mansions and vacation homes; 11 automobiles; 11 boats; 14 motorcycles; five Rolex watches; 17 baubles from Tiffany & Co.; and 11 rings and bracelets by Cartier.
In April, U.S. Fidelis filed a complaint accusing the Atkinsons of stripping the company of at least $101 million through high salaries, cash distributions and company spending to provide a lavish lifestyle for their families.
This settlement applies only to that complaint, but it could have larger ramifications.
The Atkinsons and their attorneys sought a single agreement that would shield them from future civil litigation. While no settlement could completely shield the Atkinsons from litigation, this settlement strongly discourages those lawsuits by creating a fund from the assets surrendered by the brothers. U.S. Fidelis customers and consumers would be able to tap into the fund to recover damages, but only if they agree not to sue the Atkinsons.
A hearing on the proposed settlement is scheduled for Oct. 20 before Judge Charles Rendlen III.