Jump to Navigation

CEO claims insolvency under Texas family law in his divorce case

The CEO of one of the largest capital management firms in the country is claiming he is insolvent under Texas family law. Family court uses different accounting principles than do businesses. According to Moody's Investor Services, Highland Capital Management LP is the largest manager of collateralized loan obligations by dollar amount in the U.S. At the end of 2007 Highland's assets were at $39 billion, which fell to $23 billion as of January of this year

The money manager claimed his annual income is $1.2 million; however his wife claims his 2010 tax returns showed an adjusted gross income of more than $36 million. In an interview, the CEO said that the calculation of his net-worth in the divorce case does not take into consideration contingent liabilities, such as the pending litigation the firm is facing.

Back in 2008, the Dallas based firm suspended withdrawals by investors from two hedge funds due to the credit crisis, and this suspension resulted in litigation with both banks and investors. Several investors sued the company claiming the firm deceived them about the financial health of hedge funds and the rate of redemptions available. The majority of the lawsuits have been settled or dismissed with no compensation paid out by the firm.

In an interview, the CEO stated the firm has not yet lost a case.

In September of 2011, the CEO filed for divorce from his wife of 6 years. They couple has two young children and a prenuptial agreement. His wife only wants the prenuptial agreement enforced, which guarantees here half of the couple's community property with a $5 million maximum payout.

A Texas family court judge has to decide if the wife should receive $20,000 per month in spousal support and attorney fees. According to a former employee at the firm who was called to testify by the wife, he stated that the CEO told him he wanted to reduce his overall net worth in order to pay his future ex-wife as little as possible.

In an email statement the company said that both Highland Capital and its CEO are solvent and that the family court case does not pertain to the company's financial stability or continued success.

Source: Bloomberg News, "Highland Capital Chief Tells Divorce Judge He's Insolvent," Tom Korosec, March 29, 2012

No Comments

Leave a comment
Comment Information
"I proudly and efficiently handle all types of family law issues. Please feel free to contact me to discuss your family law questions and how my firm may help you resolve them."
contact us
Contact Us Today

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.


Privacy Policy

subscribe to this blog's feed FindLaw Network