Table of Contents
Investors in Legion Capital Corporation’s Series A-1 Bonds continue waiting for answers on
when distributions will resume.
Legion Capital Corporation (“Legion Capital” or “LGCP”), a private equity firm focused on specialized lending to small and medium-sized businesses and real estate developers, suspended bond interest payments, bond maturity payments, and preferred stock dividend distributions in January 2025. The suspension followed Legion Capital’s disclosure that it lacked sufficient liquidity to meet its obligations and had entered default under its bond indenture agreement. For income-oriented investors who purchased these securities expecting stable interest payments and defined maturity dates, the continued suspension highlights a fundamental concern: whether the risks and illiquidity of the offerings were fully and clearly explained to investors at the time they were recommended.
Legion Capital’s Business Model and Investor Offerings
Legion Capital describes itself as a private equity and specialty lender providing bridge funding, acquisition finance, development financing, and growth capital to small and emerging companies and real estate developers. The firm marketed its investment products as offering attractive yields, limited correlation to traditional financial markets, and defined liquidity dates, while emphasizing its focus on market segments that were underserved by traditional banks and institutions.
Through an SEC-qualified Regulation A, Tier II offering, Legion Capital sold securities nationwide through independent broker-dealers and registered investment advisers. These offerings were available to both accredited and non-accredited investors, including qualified retirement funds, with a minimum investment of $10,000.
The offerings included Series A-1 Bonds with one-, two-, three-, and five-year terms paying stated annual interest rates ranging from 6.00% to 7.50%, as well as preferred stock shares with a stated annual dividend rate of 8.00%. Legion Capital represented that these securities were backed by senior secured mortgages on residential and commercial development properties.
Regulation A Offerings and Investor Expectations
Regulation A, Tier II offerings are commonly marketed as an alternative investment structure that allows issuers to raise capital from retail investors while remaining “SEC-qualified,” a designation that can create a perception of enhanced regulatory oversight and reduced risk. These offerings are often promoted through broker-dealers and registered investment advisers as income-producing investments with higher yields than traditional fixed-income products, lower minimum investment thresholds, and access for non-accredited investors.
Because Regulation A securities can be sold broadly to retail investors, including retirees and income-oriented investors, marketing materials frequently emphasize stated interest rates or dividend yields, collateral backing, and portfolio diversification. However, Regulation A securities remain illiquid, are dependent on the issuer’s financial condition, and generally lack a meaningful secondary market.
Legion Capital’s Regulation A filings disclose that the company’s bond and preferred stock offerings were a primary source of funding for its lending and growth activities, meaning investor returns were directly tied to Legion Capital’s ability to generate cash flow, refinance obligations, and maintain access to capital markets.
These filings also contain disclosures acknowledging that future liquidity depended in part on continued financing activity, loan performance, and market conditions, and that adverse developments could materially affect the company’s ability to meet payment obligations.
Risk Factors Disclosed in Legion Capital’s Form 1-A
In its January 2025 Form 1-A offering statement, Legion Capital warned that investing in its bonds and preferred stock involved a “high degree of risk.”
The company disclosed that its lending strategy focused on small businesses and start-up companies, which it acknowledged were inherently speculative and subject to credit deterioration, operational disruption, and adverse economic conditions.
Legion Capital further disclosed that it had no limits on the amount of leverage it could employ, had historically experienced negative cash flows, and that ongoing operations were funded, in part, through repayments of principal on outstanding loans and continued equity and debt financing. The company acknowledged an ongoing need for substantial additional capital and warned that future financing might not be available on acceptable terms, or at all.
These disclosures reflect that Legion Capital’s ability to meet interest, dividend, and maturity obligations to investors was highly dependent on continued access to capital and favorable loan performance.
Importantly, the existence of issuer risk disclosures does not address whether these securities were appropriate for retail investors seeking safe income and capital preservation. Broker-dealers recommending Regulation A securities remain obligated to evaluate whether a product’s actual risk profile, liquidity constraints, and dependence on external financing align with the investor’s objectives and financial profile.
Suspension of Payments and Default Disclosure
In January 2025, Legion Capital informed investors that it lacked the liquidity necessary to meet scheduled bond maturity payments. The company disclosed that it issued a default event notification to the bond indenture trustee and, as a result, suspended all bond interest payments and preferred stock dividend distributions until the default status is resolved.
For many investors, regular interest and dividend payments were a central component of the investment’s appeal. The suspension represents a significant change in the performance and risk profile of the securities and has raised concerns regarding Legion Capital’s financial condition and access to liquidity.
Investor Risk and Suitability Concerns
Legion Capital securities were sold through independent broker-dealers and registered investment advisers to retail investors nationwide. These financial professionals are expected to conduct reasonable due diligence and to recommend investments that are in the client’s best interest, taking into account factors such as risk tolerance, income needs, time horizon, and liquidity requirements.
The suspension of interest and dividend payments raises serious questions regarding whether these securities were presented as investments that would generate safe, stable income without adequate explanation of the issuer’s liquidity dependence, leverage, and exposure to loan-level credit deterioration. Regulation A offerings are often marketed emphasizing yield, collateral backing, and diversification, while the practical consequences of payment suspension and illiquidity may receive less attention at the point of sale.
Contact a Legion Capital Series A-1 Bonds Lawyer
Investors who purchased Legion Capital Corporation Series A-1 Bonds or preferred stock through a broker-dealer or registered investment adviser should contact Altamirano PLLC to discuss potential recovery options, including the filing of a FINRA arbitration claim. Altamirano PLLC is reviewing whether investors were adequately informed of the risks associated with Legion Capital’s Regulation A offerings, including liquidity risk, issuer default risk, and the true nature of the underlying collateral and credit exposure. The firm is actively speaking with affected investors.
Altamirano PLLC has handled numerous FINRA arbitration matters involving illiquid products and alternative investments. Investors who have suffered losses or who are no longer receiving expected interest or dividend payments from Legion Capital bonds or preferred stock are encouraged to contact Altamirano PLLC for a confidential consultation. Call (212) 220-6556 to speak with Principal Jorge Altamirano, or email [email protected] to schedule a free consultation.
Jorge Altamirano has handled more than 1,500 investor cases, with total claims exceeding $200 million, and has recovered millions of dollars for clients nationwide. His practice focuses on representing harmed investors in FINRA arbitration proceedings against broker-dealers and financial institutions.
