SALT LAKE CITY--(BUSINESS WIRE)--Lexington Law (“Lexington” or “Firm”) today announced it has filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The Firm continues serving its clients that are hamstrung by low credit scores, which are often a misrepresentation of the risk they present to creditors. “We remain steadfast in our commitment to the consumers that continue trusting us to advocate on their behalf,” said John Heath, Directing Attorney of Lexington Law.
This announcement follows a years-long legal battle with the Consumer Financial Protection Bureau (CFPB) over the interpretation of a Federal Trade Commission (FTC) rule covering the timing of billing for credit repair services engaged by inbound phone calls. After a vigorous defense of Lexington’s billing practices, the United States District Court for Utah disagreed with a prior court’s interpretation of the rule in question and imposed a six-month billing delay for clients who engage the Firm following an inbound phone call. In accordance with the Court’s new interpretation, Lexington has ceased the billing practices that were the subject of the litigation. 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, along with certain affiliated debtors, has filed a number of customary first day 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. The Firm expects to receive Court approval for these requests.
About Lexington Law
Lexington Law was founded to revolutionize the credit repair industry, by providing ethical and effective credit repair to consumers in need. The Firm is the trusted leader in the space. Lexington’s experienced lawyers and paralegals work to protect consumer credit rights and ensure that they have fair and accurate credit reports. The services they provide empower clients to take charge of their credit, which can lead to the achievement of their financial goals.
