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A short-term consumer finance company accused by a New Mexico judge of having engaged in "unconscionable lending practices" in a sector under frequent attack by anyone from activist regulators to city councilors has filed a petition for protection under Chapter 11 of the U.S. Bankruptcy Code.
Dallas-based Fastbucks Holding Corp. operates more than 60 branches in New Mexico, Nevada, Utah, Texas and Idaho through various direct and indirect subsidiaries, generating revenue of approximately $16.4 million in 2011. The company may be required to pay in excess of $10 million in restitution under a formula outlined in a Sept. 26 order issued by Santa Fe County District Court Judge Michael Vigil for alleged violations of New Mexico's Unfair Trade Practices Act.
The Fastbucks petition noted that the holding company has total liabilities of between $10 million and $50 million, but it had not yet filed a full schedule of its assets and liabilities. A declaration by Fastbucks Chairman and President Charles Horton indicates that the company contests Vigil's ruling and has not signed onto the notion that it faces more than $10 million in restitution. The company has filed a motion for a new trial and intends to appeal any adverse final judgment, Horton said.
Vigil's ruling comes in a case filed in 2009 by New Mexico Attorney General Gary King. Vigil agreed with the attorney general that the Unfair Trade Practices Act addresses the type of lending in which Fastbucks had been...