RCS Capital expects to be closer to extricating itself from the problems associated with its former executive chairman, Nicholas Schorsch, after a second bankruptcy filing, scheduled to happen over the weekend.
“We are excited about this important step forward, which puts us in the home stretch to complete our transformation into a Cetera-only organization that is independent, well-capitalized and privately owned," Larry Roth, Cetera's CEO, said in a statement. "This will truly be a fresh start for Cetera."
Two months after RCS Capital filed for a prearranged bankruptcy, the company will file a related prepackaged bankruptcy intended to eliminate some guarantees held by certain holding companies of the B-Ds within the Cetera network, as previously announced, according to a source familiar with the situation. The holding companies for the B-Ds are guarantors of RCS Capital debt.
RCS plans to restructure Cetera Financial Group as a standalone company. Cetera is the second-largest B-D in the nation by advisor headcount with more than 9,000 advisors across 10 different B-Ds. RCS expects to complete the restructuring process by May.
The B-Ds themselves will not be involved in this Chapter 11 filing and it will not impact Cetera's advisors, advisors’ clients, employees or vendors, the source said. They will also not affect the firm’s advisor deferred compensation plans.
In the January prearranged bankruptcy filing, Cetera negotiated a restructuring plan with a majority of its first and second lien lenders.
Nearly 90% of the first and second lien holders have said they support both waves of bankruptcy filings.
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