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News Now

CU System
33 CUs sue over unpaid Centrix claims
NEW YORK (10/20/08)--According to media reports, 33 credit unions have sued Lyndon Property Insurance regarding claims that were not paid on defaulted subprime auto loans. Lyndon Property is a unit of Protective Life Corp. (Bloomberg News Oct. 16). It also is the insurer for Centrix Financial, a subprime auto lending service that serviced credit unions (News Now Feb. 13). Credit unions suing Lyndon are from Texas, California and Illinois, and seek to recover losses covered under default protection policies Lyndon refused to pay. The suit was filed Oct. 10 in Los Angeles County Superior Court, Bloomberg said. Centennial, Colo.-based Centrix was placed under involuntary Chapter 11 protection on Sept. 15, 2006, by creditors IFC Credit Corp., Suntrust Leasing and Wells Fargo Equipment Finance Inc. They said Centrix owed them a combined $4.6 million in lease payments. Several days later Centrix and its affiliates filed voluntary petitions for Chapter 11 protection (News Now April 25). Credit unions and other entities have claimed millions against the company's assets. More than two-thirds of Centrix's portfolio is owned by roughly 230 credit unions nationwide. It underwrote more than 250,000 loans totaling $4 billion (News Now Sept. 6, 2002).


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