More bad news for people who put millions of dollars in Lubbock-based Ferrum Capital.
Two companies tied to the FBI investigation of securities fraud in Lubbock and San Antonio filed for bankruptcy last week. Collins Asset Group and its parent company, Hollins Holdings, filed bankruptcy petitions in Delaware. (Collins is described in court records as a Delaware limited liability company.)
Both petitions indicated, “After any administrative expenses are paid, no funds will be available for distribution to unsecured creditors.”
People in several lawsuits accused Ferrum, along with company owners Mike Cox and Joshua Allen, of running a Ponzi scheme.
Cox filed for bankruptcy (which we covered numerous times here) indicating nearly 400 people or businesses, many in the greater Lubbock or San Antonio areas, stand to lose $59 million with Ferrum. That number was updated to $82 million or more when people filed their own claims in the case.
In recent months, a bankruptcy judge ruled Ferrum, under Cox’s control, illegally sold unregistered securities and therefore he cannot wipe out a large portion of his debt.
In the meantime, Collins gets bankruptcy protection to stop collection efforts including various lawsuits filed across Texas.
A recap of what’s happened:
- Joshua Allen and Michael Cox founded Lubbock-based Ferrum Capital in 2017.
- Starting in 2018, people loaned to Ferrum with the promise of 8 or 10 percent returns depending on circumstances.
- Ferrum loaned the money to Collins Asset Group as part of a 2017 “master loan agreement.”
- Collins was supposed to collect distressed debt, according to court records.
- Collins did not pay back Ferrum (which is explained further below).
- Ferrum defaulted in late 2023 and lawsuits began hitting the court dockets.
- Ferrum was put under receivership in a San Antonio lawsuit.
- Ferrum co-owner Cox, in early 2024, filed for bankruptcy.
- The Ferrum receiver filed legal documents against Collins (and others).
- One of Ferrum’s affiliates, Brooklynn Chandler Willy, was indicted in late 2024 for obstructing an FBI investigation and later reindicted this year for additional charges including securities fraud. Only Willy was charged with a crime at this time. All other claims come from lawsuits or regulatory agencies.
- Collins and its parent company have now filed bankruptcy.
The Collins and Hollins bankruptcies
The Collins Chapter 7 (liquidation) bankruptcy petition said the company has between one and 49 creditors, with both debts and assets in a category between $10 million and $50 million.
Hollins, also Chapter 7, listed between one and 49 creditors with debts under $50,000.
Some of the information normally revealed in a bankruptcy is missing. Both bankruptcies were filed on Wednesday and a judge the next day filed notices of deficiencies in both cases.
For example, both companies are ordered to provide a list of secured creditors, unsecured creditors, assets and liabilities, contracts and unexpired leases.
The judge ordered the companies to provide the missing disclosures in the coming days.
Here’s what led to the bankruptcy
A long list of folks in Bexar County sued Allen, Cox, Ferrum Capital, Collins Asset Group, Hollins Holdings and others in late 2023. As mentioned before, a judge put Ferrum into receivership.
In September 2024, the receiver, John Patrick Lowe, filed a petition against Collins to get money back on behalf of the Ferrum participants.
“Collins has informed the Receiver that Collins has collected approximately $105,000,000 in proceeds of the accounts securing payment of the promissory notes. With the proceeds from collections on the collateral accounts, Collins should have paid Ferrum or the Receiver significantly more than Collins has paid on the promissory notes,” Lowe’s attorney wrote.
An examination of the specific court records referenced by Lowe revealed Collins paid thousands, not millions, of dollars to Ferrum after the receivership started. The $105 million, if it exists, was not explained in the records LubbockLights.com found.
A related court document in the same case said Collins’ debt (just the principal without interest) to Ferrum was $47 million. It also said Collins pledged $667 million in “face value” of securities (debt) as collateral to Ferrum. Since Collins was purchasing distressed debt, the recoverable value might have been far less than $667 million.
Collins, in April, filed a document called a “general denial” in its defense against Lowe’s legal maneuvering. Basically, Collins’ document did not go into detail but simply said the company denies all the allegations.
Collins sued before
In 2020, Collins settled a class action lawsuit in Atlanta for just under $15.8 million.
In that case, court records said, “Plaintiffs allege that CAG [Collins] is a debt buyer that purchases debt at a discount and then profits from collecting on that debt. To fund its business operations, Plaintiffs allege that CAG orchestrated a fraudulent scheme that used unregistered salespersons … and a network of shell companies … to illegally raise money from individual investors.”
Willy was also accused of selling unregistered securities in her criminal indictment. As mentioned above, a bankruptcy judge ruled Ferrum under the control of Cox sold unregistered securities. Allen was repeatedly accused of the same thing in multiple lawsuits.
Related to the Atlanta lawsuit, one person, Daryl Bank, was charged and sentenced to 35 years in federal prison for conspiracy and wire fraud. Bank had been the founder of a company (Sonoqui) that did business with Collins.
