That’s the scenario at Condor Capital, the Long Island, N.Y.-based subprime lender now tied up in legal shutdown. Condor hasn’t been able to make loans since a federal judge issued a temporary restraining order April 23.
On June 4, Condor’s attorneys filed the motion to modify the May 13 preliminary injunction that appointed a receiver to get Condor back into operating order. The motion from Condor’s attorneys is asking the court to convert the receiver into a monitor, thereby removing the position’s executive authority. They are also asking that Condor be permitted to immediately resume its loan originations, as well as requesting the unfreezing of its assets. They say if the company is not allowed to start up originations soon, it will begin the process of liquidating itself.
The latest move by Condor follows a June 2 report from the receiver, Denis O’Connor of AlixPartners LLC, that recommended to the judge that Condor not be allowed to start up its origination business yet.
All this comes after a New York State Department of Financial Services investigation alleged that the company thumbed its nose at compliance and had bilked its customers out of around $11 million dollars.
But Condor attorneys also wrote in their motion that the alleged amount owed to customers had consistently been shown to be slightly more than $1 million, not the $11 million alleged by the DFS.
Since 2013, Condor refunded over $257,000 in customer overpayments according to the attorneys. And in 2014, before the temporary restraining order, issued in May, it had refunded another $163,000.
Condor also signed a five-year contract with what the attorneys called a “world-class compliance firm” to ensure there were no more compliance issues. The attorneys said that the NYS DFS action has had a devastating impact on Condor.
Since the DFS filing, Condor has been put in default of its Wells Fargo & Co. credit facility, raising its monthly payments by $500,000; 65 employees have quit or were terminated; the company’s portfolio has been depleted and Citibank has asked the company to find a new bank. Condor’s relationship with its auto dealers has also been damaged, according to the attorneys.
Comparing its predicament to a the recent Consumer Portfolio Services Inc. $3.5 million settlement with the Federal Trade Commission, the attorneys said “here, what appears to be at issue is only a little over a million dollars of refunds that are due customers that it already begun paying and this situation has none of the egregious violations allegedly committed by CPS.”