Reliant Life Shares: Dual-Trust Liquidation

Reliant Life Shares: Dual-Trust Liquidation


Debtor(s)	Reliant Life Shares, LLC
Court	U.S. Bankruptcy Court, Central District of California (San Fernando Valley Division)
Case Number	1:24-bk-11695
Petition Date	October 7, 2024
Confirmation Date	December 29, 2025
Effective Date	January 13, 2026

Case Snapshot

Fractional Life-Settlement Model and Regulatory History

Reliant's business centered on acquiring life insurance policies in the secondary market and selling fractional investor interests tied to those policies. The Force 10 retention announcement described Reliant as a financial-services company focused on life settlements, investment returns, escrow, and trust services, while the disclosure statement says the company used a series-trust structure in which investors held beneficial interests linked to individual policies. The CRO retention application sets out the Force Ten rate table: CRO at $950 per hour, partners at $850 to $950, managing directors at $495 to $795, and analysts and staff at $225 to $495.

The disclosure statement says a state-court receiver had concluded the original one-policy-per-series model was not sustainable and had shifted toward pooling the policies in a new trust. The same filing ties the chapter 11 case to the need to resolve competing claims between investors, the Cooper judgment creditors, and other stakeholders while the portfolio still faced premium obligations and servicing costs. The disclosure statement provides an asset and claims snapshot as of September 2025: approximately 442 clients maintaining benefits totaling roughly $53.8 million in death benefits, cash of approximately $750,000, accounts receivable with a face amount of roughly $1,098,798, and a claims universe of approximately 1,085 claims with face value around $118 million after reconciliation.

The prepetition record includes several related proceedings. The December 2022 desist and refrain order lists a later settlement with the California regulator. The proposed class action alleged misleading statements about expected returns, premium obligations, and life expectancy assumptions. The appellate decision in Cooper v. Reliant Life Shares left in place the judgment that later shaped the bankruptcy negotiations.

Cooper Settlement and Excess Cash Waterfall

The debtor's Rule 9019 compromise motion proposed a deal among the debtor, the unsecured creditors' committee, and the Cooper parties that resolved a motion to dismiss, a committee adversary proceeding, and related litigation issues in one package.

The motion described allowed Cooper claims of $5 million secured and $10 million unsecured, subject to a recovery cap unless unsecured creditors were paid in full. It also laid out an "Excess Cash" waterfall under which the estate would receive the first $1.5 million of excess cash, then split later excess cash 50/50 with Cooper until the secured Cooper claim was paid. Once the secured claim was paid in full, remaining excess cash would become available for the estate and pro rata distribution to general unsecured claims, including Cooper's unsecured claim.

The motion says the Cooper parties would withdraw the dismissal effort, support a plan consistent with the settlement, and accept provisions that would bind a later trustee if one were appointed. The plan itself carries these terms forward: the Second Amended Plan places the Cooper Parties' allowed unsecured claim in Class 3b at $10 million, with treatment via a pro rata beneficial interest in the liquidating trust and distributions from available trust proceeds after senior classes are paid in full, subject to the caps and terms in the Cooper stipulation.

ISC Servicing Engagement and Policy Lapse Analysis

The debtor's ISC servicing motion sought authority both to obtain medical updates for insureds and to complete a policy-title transfer that the old structure had complicated. The motion describes the specific issue: the Symetra carrier had refused to change ownership of policy number US00012361 under the old sub-trust structure due to irrevocable beneficiary issues, and the debtor sought court authority to transfer ownership to the receivership trust.

That motion listed servicing costs: $105 per policy each month, $45 per health care provider for medical-record collection plus out-of-pocket costs, $50 for carrier information requests not already in ISC's possession, and hourly rates ranging from $50 for administrative support to $600 for a managing director or principal. The agreement also included an early termination fee of $500 per policy. The debtor later asked for authority in a policy lapse motion when it concluded the same Symetra policy had negative value to the estate. That motion described the policy's $6.75 million death benefit, a forfeiture-related funding gap of $2.84 million, and an oversold amount of $74,525. It also framed the decision through discounted-value analysis using market discount rates between 13% and 19%. The motion described several non-client policy beneficiaries with specified percentage interests, including both revocable and irrevocable beneficiaries who did not pay premiums, and noted that they were served to give notice and an opportunity to assume premium obligations if they wanted to preserve their interests.

Policy Sales and Melville Capital Marketing

The Second Amended Disclosure Statement describes a plan to market seven policies totaling approximately $27 million in death benefits that were not needed to cover maintained investor benefits. The disclosure statement says the estate retained Melville Capital LLC to market and sell these policies, with a bidding deadline of October 20, 2025 and a sale hearing on October 23, 2025. The Rubin declaration filed at confirmation states that Melville marketed the seven policies and sold four of them for $3.4 million. Sale proceeds were allocated under the Cooper stipulation, with the disclosure statement describing the intent to pay half of net proceeds to Cooper.

Liquidating Trust and New Trust Dual Structure

The Second Amended Plan of Liquidation and the confirmation order formalized the case as a wind-down. The plan provides that plan assets vest in a liquidating trust for the benefit of allowed claimholders, while the life-settlement policies are handled through a separate "New Trust" structure. The estate's claims-resolution and distribution machinery sits in one trust, and the pooled policy administration sits in another.

The disclosure statement says the new trust held 23 policies. The plan identifies Nicholas D. Rubin as the liquidating trustee and gives the trustee powers comparable in many respects to those of a chapter 11 trustee, subject to the plan and trust documents. The plan also sets out settlement approval thresholds for the liquidating trustee: settlements of $50,000 or less do not require court approval, while settlements above $50,000 require court approval with notice to specified parties including Cooper. The trust agreement requires holding cash and plan assets in U.S. Trustee approved depositories with limitations on investment.

The confirmation order approved the release and exculpation framework with carve-outs for actual fraud, gross negligence, and willful misconduct. The order found Classes 1b, 3a, 3b, 3c, and 3d impaired and accepting, treated Classes 1a and 2 as unimpaired, and confirmed the plan over Class 4's deemed rejection under section 1129(b).

The debtor's notice of effective date says the plan went effective on January 13, 2026, that debtor assets vested in the liquidating trust on that date, and that the life-settlement policies held by the receivership statutory trust were deemed pooled. The same notice set January 28, 2026 as the rejection-damages bar date and February 12, 2026 as the deadline for administrative claims other than professional fees.

Omnibus Objections and Claims Reconciliation

The post-confirmation claims docket shows the estate working through a large claims universe of roughly 1,085 claims. The debtor's eighth omnibus motion seeks to reclassify several claims from secured to general unsecured status on the basis that investors were not granted liens and provided no evidence supporting secured status; the motion targets Claim Nos. 281 (James Reed and Carolynn Reed), 524 (Dawn A. Stallmo), 943 (Kent Hansen), and 1158 (Jose Saul Villarreal) for reclassification and seeks to disallow Claim Nos. 169 and 539 (Wallace F. Chin) as duplicates of Claim No. 155.

The debtor's first omnibus motion seeks to reclassify multiple claims designated as priority unsecured to general unsecured status, asserting that the claims arise from life-settlement investments and do not qualify for priority under section 507(a). That motion targets Claim Nos. 103, 125, 190, 333, 383, 418, 600, 626, 638, 667, 744, 796, 807, 809, 1139, 1140, 1172, 1173, and 1208 for reclassification and seeks to disallow Claim No. 99 as superseded by Claim No. 1172.

A separate motion seeks to reclassify Claim No. 1148 (Scott Grady SLG Trust) as an equity interest, asserting the claim is based on the former principal's equity position and a purported right to recover forfeited investment interests rather than a creditor claim. The motion points to a related adversary proceeding against Scott Grady alleging fraudulent transfer claims. A lodged order on the second omnibus motion reclassifies Claim Nos. 167, 300, 382, 398, 400, 482, 487, 738, 956, 1138, 1154, and 1181 as general unsecured and disallows Claim Nos. 199 and 805 as duplicate claims, with a status conference on Claim No. 1200 set for February 11, 2026.

Class 3d Election Process and Professional Fee Applications

The notice to Class 3d claimants about electing Class 3c treatment gave holders a way to assign personal claims and change treatment by a March 16, 2026 deadline. The notice defines Personal Claims broadly as claims or causes of action against the estate, insiders, agents, financial institutions, trusts, or trustees relating to the life-settlement policies or the debtor's business. The election requires submission of the prescribed form to debtor's counsel by email or mail.

Professional fee applications. Debtor's counsel Raines Feldman Littrell LLP seeks final allowance of $1,913,114.50 in fees and $10,710.07 in expenses for the period October 7, 2024 through January 13, 2026, with the heaviest final-period work identified as plan and disclosure statement work and claims administration and objections. Committee counsel Golden Goodrich LLP seeks $136,937.50 in final-period fees and $4,126.20 in final-period expenses for work through February 12, 2026, focused on insider litigation, plan strategy, and fee work. Separately, receiver counsel Levene, Neale, Bender, Yoo & Golubchik LLP seeks section 503(b) allowance of receiver-related fees and expenses, arguing that prepetition and transition-period work stabilized the policy portfolio and laid the groundwork for the chapter 11 process.

Cooper Waterfall and Pooled Investor Interests

Under the confirmed plan, unsecured creditor distributions are governed by the Cooper settlement terms and the liquidating trust waterfall. Investors who previously held fractional interests tied to individual policies through the one-policy-per-series structure now hold interests in the pooled New Trust. The confirmation order requires the debtor to notify Class 3d creditors within two weeks of the effective date of the election opportunity. A joint status report is due April 14, 2026, with the initial post-confirmation status conference set for April 28, 2026. Claims reconciliation, Class 3d-to-3c elections, and pooled-portfolio administration remain pending.

Frequently Asked Questions

When did Reliant Life Shares file chapter 11? Reliant filed chapter 11 on October 7, 2024, in the Central District of California, San Fernando Valley Division.

Was Reliant reorganized or liquidated? The court confirmed a liquidation plan on December 29, 2025, and the plan became operative on January 13, 2026.

What was the main dispute in the case? The filings center on competing rights among investors, the Cooper judgment creditors (who held an original judgment of $15,390,253.22), and the estate over life-settlement policies, trust structures, and related recoveries.

How many policies does the estate hold? The disclosure statement says the New Trust holds 23 policies, with approximately 442 clients maintaining benefits totaling roughly $53.8 million in death benefits.

What happens after confirmation? The liquidating trustee continues claims reconciliation, elections, distributions, and administration of the pooled policy portfolio. The initial post-confirmation status conference is set for April 28, 2026.

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