Universal Settlements International Inc.

Restructuring Information

Universal is extremely proud of its uncompromising approach towards safeguarding the interests of its clients. During the recent global economic crisis Universal faced a financial crisis of its own due to a number of external factors. Rather than take the easy way out, Universal utilized approximately $10 Million in corporate assets in order to fund a restructuring plan that would best protect its clients. There is no clearer evidence of a company demonstrating integrity and dedication to its clients than Universal’s use of its own funds in order to see this restructuring initiative through to a successful completion.

On December 2, 2008, Universal was granted protection from its creditors pursuant to an Initial Order made under the Companies’ Creditors Arrangement Act of Canada (the “CCAA”) by the Ontario Superior Court of Justice (the “Court”).

Within the context of the CCAA proceeding, Universal developed a Plan of Compromise and Arrangement (the “Plan”) that restructured its affairs and affected the claims of its creditors. The Plan was approved by Universal’s creditors on June 17, 2009, with over 99% approving of The Plan, and was sanctioned by the Court on June 22, 2009. The Plan was implemented on July 21, 2009, and affects all parties who had outstanding investments in life settlements with Universal.

Several hundred clients have personally been in contact with Universal to offer their gratitude for the commitment that Universal has demonstrated to them, knowing that Universal has always acted to protect their best interests as best it could during a very difficult period. Universal continues to protect its clients’ best interests and is currently servicing approximately $215 Million in assets which were impacted by the CCAA proceeding.

Universal’s liquidity crisis, and resulting CCAA application, arose primarily due to the failure of a re-insurer not performing as per its contractual obligations. As part of the re-insured GLS Program, Universal contracted with a European bonding company to guarantee the payments due to purchasers who had invested in a re-insured investment product which Universal once offered. In 2008, Universal learned that the bonding company was insolvent.

The negative consequences of this insolvency were significant. Re-insurance claims were not paid to Universal, and in turn, Universal was unable to pay purchasers the maturity amounts. In addition, Universal had to maintain the premiums on the policies that were re-insured, in order to ensure that no policy would lapse. Having only provided for premium reserves up to the re-insurance dates, Universal faced a significant premium liability that it could not fund.

During the restructuring proceedings, Universal spent the remainder of its corporate funds and liquidated corporate assets totalling roughly US$10 Million to ensure that all premiums were paid and to fund the CCAA process, thereby protecting the interests of Universal’s clients until such time as the Plan could be developed, approved and implemented.

Universal’s Plan best protects clients’ interests and will maximize returns. The Plan sets out the way in which clients will have the opportunity to have all invested principal returned over a period of time, with reasonable potential for a return on investment as well.


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