Item 1. Legal Proceedings
Item 1. Legal Proceedings
Many aspects of our business involve substantial risks of legal
and regulatory liability. In the normal course of business, we have
been named as defendants or co-defendants in lawsuits involving
primarily claims for damages. We are also involved in a number
of judicial and regulatory matters, including exams, investigations
and similar reviews, arising out of the conduct of our business.
Based on currently available information, we do not believe that
any matter will have a material adverse effect on our
consolidated financial statements .
In July 2024, we commenced litigation against the former
portfolio manager of 3ǀ5ǀ2 Capital ABS Master Fund LP (the
“Fund”) and a variety of individuals and entities (collectively, the
“defendants”), alleging that the defendants engaged in a
longstanding Ponzi scheme resulting in the misappropriation of
approximately $106 million from investors in the Fund and in
certain related accounts, including a separately managed
account held by the Company. In June 2025, we commenced
litigation against First Fed Bank alleging that it participated in and
aided and abetted the Ponzi scheme. The Company has
recognized a loss of $17.2 million in respect of our investment in
the Fund. We anticipate that this litigation, which will not be
resolved in the near term, will result in the recovery of some or all
of our losses but cannot, with any reliable accuracy, estimate
how much we will be able to recover, or the outcome of this
litigation, which may lead to additional proceedings.
On February 26, 2026, Eugena II Investment Holdings Limited and
Eugenia III Investment Holdings Limited, investors in Point Bonita
Capital Fund (Cayman) LP, filed a lawsuit against us in the
Supreme Court for the State of New York alleging that the
defendants have liability for approximately $18.4 million in losses
allegedly suffered in connection with investments in receivables
purchased from First Brands Group.
On March 6, 2026, Western Alliance Trust Company, N.A. and
Western Alliance Bank filed a lawsuit against the Company in the
Supreme Court for the State of New York alleging that the
Company is responsible, based on theories of veil piercing and
fraud, for $126 million in loan obligations incurred by special
purpose vehicles that purchased receivables from affiliates of
First Brands Group, LLC.
Item 1A. Risk Factors
Information regarding our risk factors appears in Item 1A. of our
Annual Report on Form 10-K for the year ended November 30,
2025 . These risk factors describe some of the assumptions,
risks, uncertainties and other factors that could adversely affect
our business or that could otherwise result in changes that differ
materially from our expectations.
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