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CU System
Judge OKs settlement in suit involving Centrix
KANSAS CITY (5/27/11)--A federal judge has approved a settlement totaling $2.6 million in a class action suit involving the Centrix Financial LLC, a Centennial, Colo.-based company that financed subprime auto loans for credit unions and went bankrupt in 2008. U.S. District Judge Gary A. Fenner of the U.S. District Court for the Western District of Missouri on May 19 approved the settlement, which had been filed with the court on Feb. 4, for the class action case of Cecil E. Hopkins vs. Kansas City Teachers Community CU and Marathon Rothschild CU, Rothschild, Wis., according to court documents. The suit included 140 class action claimants who obtained vehicle loans from the credit unions in conjunction with a portfolio management program administered by Centrix Financial and whose vehicles were repossessed. The settlement allows a cash payment of about $9,315 per person, totaling $1.3 million, plus write-offs on deficiencies or account balances remaining on their loans totaling $8,968 or $1.25 million so borrowers can improve their credit scores. The settlement dismisses the suit against the credit union without prejudice. After a 40-day waiting period to see if any appeals are filed, the settlement will be distributed. Attorneys in the case were awarded $819,631, which includes litigation expenses and court costs incurred, as well as 30.4% of the gross settlement fund in attorneys fees. Centrix Financial was placed under involuntary Chapter 11 protection on Sept. 15, 2008. Several days later the company and its affiliates filed voluntary petitions for Chapter 11 protection (News Now Oct. 20, 2008). Credit unions and other entities claimed millions against the company's assets. More than two-thirds of Centrix's portfolio was owned by about 230 credit unions across the nation. It underwrote more than 250,000 loans totaling $4 billion.


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