(Bloomberg) -- Lear Capital Inc., a gold and silver coin dealer previously accused of deceiving customers, filed for bankruptcy in Delaware on Wednesday to streamline any future legal spats.
The company in recent years was sued by both the City of Los Angeles and the State of New York for allegedly pressuring elderly customers and misleading them about fees tied to purchases of its coins. Lear was ordered to pay $2.75 million to LA and $6 million to New York as a result.
Although those suits are finished, Lear “believes there are, or may be, other outstanding claims of its customers or other agencies that may be formalized in the future,” the company said in its Chapter 11 petition. Lear doesn't expect to be held liable for any future legal claims, but the bankruptcy filing will allow it to simplify the process for future disputes, the company said.
“After careful consideration, we determined that through this process the Company could achieve comprehensive resolution of potential government claims while still operating an otherwise financially strong business,” John Ohanesian, chief executive officer of Lear Capital, said in an emailed statement.
Chapter 11 bankruptcy filings allow a company to keep operating while its advisers and executives negotiate with creditors. For companies facing a number of lawsuits, bankruptcy lets those claims be handled relatively quickly by a single federal judge, rather than play out in several expensive and lengthy proceedings.
Lear estimates it has assets of as much as $50 million and liabilities of no more than $10 million, according to court papers. The company has done more than $3 billion in sales since 1997, according to its website.
The bankruptcy is Lear Capital Inc., 22-10165, U.S. Bankruptcy Court for the District of Delaware.
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