(Bloomberg) -- Life Partners Holdings Inc., which buys rights to life insurance death benefits and sells them to investors, filed for bankruptcy protection as it seeks to avoid legal claims including a $46 million judgment against it and its chief executive officer.

A subsidiary, Life Partners Inc., will continue to operate, Waco, Texas-based Life Partners said today in a statement distributed by Business Wire. The filing will also help the company avoid a Securities and Exchange Commission move to appoint a receiver, which could lead to a liquidation and make an appeal of the judgment impossible, the company said.

“The company elected to seek protection under Chapter 11 while it pursues an appeal of a $46 million judgment,” according to the statement.

CEO Brian Pardo and another officer were ordered to pay penalties after a federal jury ruled in December that the company filed false and misleading statements with the SEC.

The Chapter 11 filing, in Fort Worth, Texas, listed debts of as much as $50 million. Life Partners and its units have $18.9 million in assets, including $2.9 million of cash and cash equivalents, according to the statement.

Shares fell to an intraday low of 12 cents from 53 cents on the Nasdaq stock exchange. Shares of GWG Holdings Inc., a Minneapolis-based company in the same business, fell 10 percent to 6.05 from 6.73.

Life Partners last year paid $71 million to clients. Since incorporating in 1991, it’s bought more than 6,500 policies worth $3.2 billion, according to the statement.

Bankruptcy protection will also help the company avoid “other pending litigation,” Pardo said in the statement.

The case is In re Life Partners Holdings Inc., 15-40289, U.S. Bankruptcy Court, Northern District of Texas (Fort Worth).

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