For Cetera Financial Group, it's back to the future.
RCS Capital, the parent of Cetera, emerged from bankruptcy on Monday, allowing it to rename itself Aretec – Cetera spelled backward.
The changes bring to an end months of questions and worry for many of the 9,000 advisers under the cloud of its tainted parent company.
"We are really excited to be recapitalized and private and have a new board composed of members who are experienced, intelligent and fully engaged," says Cetera CEO Larry Roth. The new name "is symbolic, given that the successful turnaround we've achieved in the past couple of months, we think, is going to take the firm in a new direction."
After a federal bankruptcy judge approved the RCS prepackaged bankruptcy plan last week, RCS took receipt of a promised $150 million from its new owners Monday, effectively allowing the company to announce its emergence from bankruptcy.
On Wednesday, the company publicly announced the end of its restructuring process and new name.
"As far as the court and our new owners are concerned, in terms of requirements, we are already free of the Chapter 11 process at this point," Cetera spokesman Joe Kuo said.
The seemingly clever solution to on a new name apparently will result in at least some corporate confusion: An 11-year-old IT company named Aretec is headquartered in Fairfax, Va., and counts the SEC and the Department of Defense among its clients.
The new owners of the planning firm Cetera, which currently has 10 broker-dealers with about 9,000 advisers, have not been disclosed, the company's new chairman, Robert Moore, says. However, they do not include controversial RCS founder Nicholas Schorsch, he adds. As part of the reorganization, Cetera plans to shut down two of its BDs, VSR Financial Services and Investors Capital, by the fall, Kuo says.
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Also in the restructuring, Aretec will wind down its New York office, the former RCS headquarters, and lay off the "handful" of employees there, Kuo says. The firm's headquarters will remain in El Segundo, Calif.
The $150 million infusion from Aretec's new equity owners will fund investments in adviser growth, technology and practice management support, according to a release.
Aretec elected a full slate of board members this week, Roth said.
Moore called the appointment "an honor at a time when the industry is in need of authentic leadership to emerge and help advisers with where the industry is going, as opposed to where it was historically."
One adviser expressed relief that the bankruptcy has been concluded.
“I think it’s safe to say that advisers affiliated with Cetera feel refreshed, recharged and ready to take on the challenges the industry may present," Dan May, a Cetera regional leader and CEO of AdvisorNet in Minneapolis, said in an email statement.
Jeff Nash, president of Nash Consulting Group, which has worked with a number of Cetera firms, says in an email statement that Roth has shown he can make tough decisions, including the one to
“Larry Roth and his management team at Cetera have shown the brokerage industry that with the right leadership and execution, you can survive almost any set of circumstances," Nash said.
Roth, former CEO of AIG Advisor Group, had brought in outside expertise, including a restructuring specialist, to lead it through the Chapter 11 reorganization. RCS Capital filed for bankruptcy on Jan. 31.
END OF AN ERA
Nontraded REIT kingpin Schorsch purchased Cetera in 2014 for more than $1 billion through RCS Capital, only to preside over the collapse of RCS over the next year and a half after a scandal at another one of his companies.
Cetera had been formed
Many longtime Cetera advisers, who paid about $22 per share for RCS stock, watched the value of that stock price drop to .01 cents before it was delisted.
