Skip navigation
cetera building

Cetera Out of Bankruptcy

The firm’s parent company RCAP officially emerged from bankruptcy this week, with an infusion of fresh capital, a former LPL exec on the board and a new name.

Cetera Financial Group announced on Wednesday that its parent company, RCS Capital Corporation, officially emerged from its long march through bankruptcy and reorganization and now stands as a private company with $150 million in fresh capital, a healthy balance sheet and a sole focus on Cetera Financial Group as its only operating entity.  

“We completed our transformation process on a very fast track and in strong shape, all while retaining the loyalty of the overwhelming majority of the advisors and institutions we serve,” said Lawrence Roth, CEO of Cetera Financial Group. “We are now shifting into execution mode.” 

As part of the process, RCS Capital Corporation will be renamed Aretec, or Cetera spelled backwards, but it’s not a name that will be in the marketplace. “It exists primarily for legal purposes,” he said. “The parent company is not an operating entity and we are not building a brand around it. We are singularly focused on Cetera Financial Group and will continue building its powerful brand equity."

The official announcement also confirmed that former LPL Financial President Robert Moore is now non-executive chairman of the board of Cetera Financial.

Moore said Roth and his team did “an incredible job” navigating the bankruptcy and reorganization process with minimal disruption to the advisors. “It was a challenging period, and they withstood that test admirably.” 

Moore said he would help contribute to corporate strategy and governance.

Last March, Moore stepped down from his role at LPL to become CEO of Legal & General Investment Management America, an asset manager; he’s expected to continue in that role while serving as Cetera’s non-executive chairman.

RCAP filed for a prearranged Chapter 11 bankruptcy in late January, listing assets of close to $2 billion and debts of $1.4 billion. Then in March, the firm filed a pre-packaged Chapter 11 bankruptcy for the holding companies of its broker/dealers, a move meant to restructure the holding companies’ terms with RCAP creditors. The court approved both bankruptcy plans, according to Prime Clerk documents.

As part of the restructuring, Investors Capital Corp., one of Cetera’s b/ds, will be merged with Cetera Advisors, and VSR Financial will merge with Summit Brokerage Services.

The move out of bankruptcy closes a long chapter in Cetera’s evolution. Real estate maven Nicholas Schorsch founded RCS Capital as a holding company for various business interests involved in the production and distribution of direct investment programs like non-traded real estate trusts. He took the firm public in June 2013, raising $55 million and valuing the company at $535 million.

Using the capital, he went on an acquisition spree, stitching together several b/d firms and growing Cetera Financial Group to be the second largest network of independent b/ds after LPL Financial. Accounting irregularities in other corners of Schorsch’s empire started a chain reaction which saw Schorsch leave the firm and the beginning of its reorganization.

TAGS: Industry
Hide comments

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish