RCAP Bankruptcy Confirmed by Judge, Cetera to Emerge Independent Soon
The bankruptcy plan for RCS Capital (NYSE: RCAP), the parent company of Cetera Financial Group, has been confirmed by Judge Mary Walrath of the U.S. Bankruptcy Court in Delaware.
The bankruptcy, which was announced in February, is a big step forward for Cetera emerging as a private, independent retail business with no remaining ties to Nicholas Schorsch’s legacy firm.
“We’re excited by this final step towards the company’s successful exit from the Chapter 11 process, and its emergence as a Cetera-only organization that is privately owned, independently managed, and well-positioned for long-term success in serving financial advisers and financial institutions,” said David Orlofsky, RCAP’s chief restructuring officer. “We expect formal emergence from the restructuring process to follow soon, at which time Cetera will have further public comment.”
Cetera is one of the nation’s largest networks of independent broker-dealer firms and was purchased by RCAP more than two years ago for $1.2 billion.
RCAP’s downfall, and subsequent delisting from the New York Stock Exchange, was the result of a $23 million accounting error and cover-up revealed by another Schorsch-controlled entity, American Realty Capital Properties Inc., now Vereit (NYSE:VER).
The bankruptcy confirmation brings a collective sigh of relief to those involved with the matter, as a number of objections raised by Schorsch and others threatened to throw a wrench in the proceedings.
Yesterday, The DI Wire reported that Robert Moore, former president of LPL Financial, is expected to serve as chairman of Cetera when the bankruptcy is finalized. The firm is also shutting down two of its independent broker-dealers, VSR Financial Services and Investors Capital Corporation, with only a select group of advisers being integrated into the company’s other firms.
Cetera Financial Group is a network of independent retail broker-dealers comprised of 10 firms – four Cetera-branded firms (Cetera Advisors, Cetera Advisor Networks, Cetera Investment Services, and Cetera Financial Specialists) along with First Allied Securities, Investors Capital Corporation, Legend Equities Corporation, Summit Brokerage, VSR Financial Services and Girard Securities.
