Atlanta-based subprime lender CompuCredit Holdings Corp. can go ahead and make a $25 million dividend payment despite the protestations of a group of investment funds that assert they're being defrauded by the cash-strapped company.
In an oral ruling Tuesday in Minneapolis, U.S. District Court Judge James Rosenbaum shot down the group's request for a temporary restraining order that would have prevented CompuCredit Holdings from spending the $25 million. The judge reasoned that he didn't think the debt holders showed the company was insolvent or would become insolvent by making the payment, an attorney at the hearing said.
The hearing on the restraining order was part of a fraud lawsuit that nearly two dozen investment funds, including some managed by Whitebox Advisors of Minneapolis, filed against CompuCredit on Dec. 21. Among other things, they argue the company is facing a liquidity crisis and has no right to spend $25 million on a sudden dividend, most of which will go to shareholders who are corporate insiders. The lawsuit continues.
CompuCredit has substantial operations in Minnesota, including an office in St. Cloud. The company has said the case has no merit.
Jennifer Bjorhus • 612-673-4683
