Progrexion and certain of its wholly-owned subsidiaries and affiliates filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code.
“This move will ensure that we set a course for a future filled with advocacy that will lead to more Americans securing financing on the most favorable terms available to them,” Chad Wallace, CEO of Progrexion, said.
The U.S. District Court for Utah recently ruled against the company on behalf of the Consumer Financial Protection Bureau (CFPB), regarding the federal agency’s interpretation of the telemarketing sales rule (TSR). The court agreed with the CFPB and ruled that credit repair companies securing business by way of telephonic communication must wait six months to bill clients after delivering its services. The interpretation of the TSR has caused Progrexion to cease all non-service-related communications with consumers, precipitating the need for the company to cut its staffing levels.
Progrexion is now focused on an expedited Chapter 11 process to ensure it can provide clarity on the future of the company to its customers, vendors and employees. In the interim, Progrexion will continue operating in the ordinary course of business under the jurisdiction of the bankruptcy court and in accordance with the applicable provisions of the U.S. Bankruptcy Code. The company filed customary motions requesting that the court authorize its ability to use cash on hand to support this process, including payment of employee wages and benefits without interruption. The company intends to fully pay suppliers and vendors pursuant to normal terms for goods and services provided in the post-petition period.