FINRA Broadens IHC Arbitration Stay Beyond Court’s Injunction

The Financial Industry Regulatory Authority has moved to pause arbitration proceedings tied to Inspired Healthcare Capital Holdings beyond the scope of the preliminary injunction that U.S. Bankruptcy Judge Mark X. Mullin entered July 24, according to a FINRA arbitration notice reviewed by AltsWire.

The notice directs a pause of all arbitration proceedings involving IHC-related claims even where those claims make up only a minority of a claimant’s dispute against a registered representative – a scope broader than Mullin’s order, which by its terms covers the roughly 105 claims specifically identified as arising from IHC investment offerings.

Notably, FINRA’s pause aligns with the November 2026 expiration set in Mullin’s injunction, rather than establishing its own independent timeline. That detail suggests coordination with the bankruptcy court’s schedule rather than a parallel or conflicting deadline.

Background

Mullin granted IHC the preliminary injunction on July 24, pausing more than 100 FINRA arbitrations and other legal proceedings brought by investors against the company’s broker-dealer network and former chief executive officer Luke Lee for 120 days. The order enjoined any IHC investor – including roughly 90 objecting FINRA claimants who opposed the motion – from commencing or continuing lawsuits, arbitrations, or other proceedings against the non-debtor defendants named in the case. Absent an extension, that injunction expires Nov. 21.

The court granted the injunction under 11 U.S.C. §105(a), finding IHC met all four factors required for preliminary injunctive relief: likelihood of success on the merits, irreparable harm absent an injunction, a balance of equities favoring the company, and service of the public interest. Mullin credited testimony from chief restructuring officer M. Benjamin Jones that IHC’s corporate staff – cut from more than 200 employees in mid-2025 to 14 currently – would be forced to divert attention from the Section 363 sale process to monitor arbitration proceedings if the injunction were denied.

FINRA’s broader pause comes as IHC’s sale process approaches its most consequential stretch, with bids due Aug. 6, an auction set for Aug. 12, and a sale hearing scheduled for Aug. 18.

IHC filed for Chapter 11 protection in February, listing liabilities of between $1 billion and $10 billion, following the July 2025 suspension of investor distributions amid a U.S. Securities and Exchange Commission review and the shutdown of its in-house operator, Volante Senior Living.

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