Hailey
Kansas lawmakers are keeping a close watch on a company called Beneficient and its financial problems. This company has a part called BFF, which is based in Kansas and does business with hard-to-sell assets. Because of recent troubles at the main company, the Kansas bank commissioner is tightening the rules and checking on BFF more often.
Bank Commissioner Tightens Oversight on BFF
The Kansas State Bank Commissioner, David Herndon, told lawmakers that BFF, a part of Beneficient, will receive a corrective action order. Instead of checking on the company once a year, the bank will now watch BFF all the time. This change is happening because Beneficient, the main company in Texas, is facing serious problems.
Herndon said several bad things about Beneficient were made public, and that caused concern about how it could affect BFF. In a recent report to the U.S. Securities and Exchange Commission (SEC), Beneficient’s auditors said the company might go bankrupt. They included a “lack of a going concern” warning, which means they’re not sure the company can stay in business.
Stock Value Falls and CEO Resigns
Beneficient’s stock dropped so much that it no longer meets Nasdaq’s listing rules. On top of that, their insurance company had to pay $50 million to settle a lawsuit that said company leaders caused the failure of Beneficient’s old parent company.
Brad Heppner, Beneficient’s founder and former CEO, stepped down to avoid answering questions from the audit committee. He even said the company should shut down—something he told lawmakers last year would never happen.
State May Revoke BFF’s Charter
Herndon also said Kansas might take back the bank charter from BFF and cancel the law (called the TEFFI Act) that allowed them to do business in the state. But Alan Deines, a director at BFF, said this talk was confusing and made it sound like the company had done something wrong, which he disagreed with.
Executives Say They’re Still Hopeful
Some leaders at Beneficient tried to calm lawmakers. Derek Fletcher, the president of Beneficient, said the company had faced many problems but was still excited about the future. He praised Heppner as a visionary but disagreed with his call to shut down the company.
Fletcher also said the money in BFF’s trust accounts for Kansas development projects is safe. Even if the company closes, the money already set aside will still be there.
Plans to build a new grocery store in Hesston (Heppner’s hometown) are still on, but it will be smaller than originally planned. Fletcher promised that the company would continue working hard.
Frustration Over Negative Headlines
Alan Deines said the deal with Kansas in 2021 to support small-town development had worked well. The Department of Commerce gave out $25,000 grants for local improvements using money from Beneficient. However, he said bad headlines were hurting their image, even though they were doing some good.
New CEO Promises Transparency
James Silk, the new interim CEO, used to be Beneficient’s lawyer. He said he came back because he believes in the company. He promised to lead with honesty and professionalism. He said BFF still has a good chance to grow by helping people and businesses turn illiquid assets into cash.
Lawmakers Plan Further Review
Rep. Nick Hoheisel, who leads the oversight committee, said the hearing was necessary due to the company’s big changes. He suggested they meet again in October or November. Some lawmakers even talked about using some of Beneficient’s funds for a state-run ad campaign.
Senator Stephen Owens, from Hesston, said the program hadn’t gone as planned, but the company had still helped Kansas. Over $3 million in grants went to Kansas towns because of BFF.
Kansas lawmakers are facing a tough decision. While Beneficient and BFF have brought money into the state, their recent troubles can’t be ignored. With leadership changes, lawsuits, and financial struggles, the future of this partnership is unclear. Lawmakers are expected to take another look soon. Until then, the company is under a microscope.