For affiliates who invested in TelexFree, the current situation is a bonafied mess.
Little to nothing has been officially communicated to affiliates, with the roadmap of fund recovery a murky minefield of uncertainty.
I’ve tried my best to analyze and cover what’s happened on the legal front, but short of
predicting an inevitable Chapter 7 liquidation
, at present have no idea how long this is going to take. Or more importantly, what the alternatives are.
We know the court-appointed Trustee isn’t interested in perpetuating the myth that TelexFree was a legitimate business, but he’s been rather quiet of late. And paradoxically representing the best interests of TelexFree as an estate, hasn’t to my knowledge communicated anything formally to the company’s investors.
Quick to file applications demanding millions of dollars be paid to them for services rendered to assist TelexFree in dodging financial liabilities to affiliates via bankruptcy filings, Alvarez & Marsal North America, Greenberg Traurig and Gordon Silver have together requested $5.64 million in expenses.
Not happy with the possibility of funds being released to these firms, a group of ninety-four TelexFree affiliates have formed what they’re calling an “ad hoc committee”.
Led by counsel at Brown Rudnick, these affiliates are now seeking a rejection or temporary suspension of the reimbursement claims.
The committee’s objection comes on the eve of a September 23rd hearing to determine the fate of the three firm’s reimbursement claims.
The ninety-four affiliates who have signed their name to the objection express their frustration at the current climate facing TelexFree investors, particularly those who don’t speak English:
As this Court is aware, nearly five months have passed since these debtors (collectively, the “Debtors” or “TelexFree”) filed for Chapter 11 relief because of the collapse of their Ponzi scheme that drew in cash reported to exceed $1 billion or more, largely from individuals targeted from non-English speaking communities and for whom these losses often represented a major part of their life savings.
The vast majority of the Debtors’ general unsecured creditors are the hundreds of thousands of Promoters unknowingly engaged to promote the Debtors’ Ponzi scheme. Most are unfamiliar with the Chapter 11 process.
As the scheme targeted immigrant communities, including the Brazilian, Dominican, Nigerian and Russian communities, many Promoters do not speak English fluently.
The bulk of the Debtors’ unsecured creditors cannot engage with these Chapter 11 Cases in any meaningful way.
During this five month period, the U.S. Securities and Exchange Commission (the “SEC”) has filed an emergency civil enforcement action against the Debtors, these cases have been transferred from the District of Nevada to this Court, responsible persons have been criminally charged and others have fled or attempted to flee the country, and a Chapter 11 Trustee has been appointed.
Upon in
🤖 Quick Answer
What is the current situation for TelexFree affiliates regarding fund recovery?TelexFree affiliates face significant uncertainty regarding fund recovery. Official communications remain minimal, and the recovery roadmap is unclear. The court-appointed Trustee has maintained limited public engagement, creating confusion about timelines and alternative options for investors seeking compensation.
Why have TelexFree affiliates formed an ad hoc committee?
Affiliates established an ad hoc committee to collectively address the lack of official communication and coordinate demands regarding their investments. This organizational effort represents an attempt to gain clarity on recovery procedures and timelines from relevant authorities and the court-appointed Trustee.
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