LM Funding America entered into a stock purchase agreement pursuant to which the company sold all the issued and outstanding shares of its wholly owned subsidiary, IIU Inc., to Craven House Capital North America LLC.

Craven House Capital paid the purchase price of about $3.6 million through the cancellation of the roughly $3.5 million convertible promissory note LM Funding America issued to Craven House Capital on Jan. 16, 2019, plus forgiveness of $100,787 of accrued interest.

The transaction closed Jan. 8.

LM Funding America originally paid nearly $5.0 million for the purchase of insurance broker IIU in January 2019, which included a negative $720,386 net fair value of assets and about $5.7 million of goodwill. The company estimates the sale of IIU may result in a loss of about $1.5 million to $1.75 million.

In connection with closing the stock purchase agreement and sale, Mark Pajak resigned as COO of LM Funding America, effective Jan. 8.

LM Funding America also announced that it has engaged Maxim Group LLC as financial adviser to provide strategic advisory services for the company's 2020 corporate initiative roadmap.

In a news release, LM Funding America CEO Bruce Rodgers said that discussions with Maxim and "others" indicated shareholder value could be better served by selling IIU instead of issuing an additional 1.4 million shares to satisfy the convertible note.