London Capital & Finance administrators publish progress report

Maria Nikolova

It is not anticipated that there will be a sufficient surplus beyond the sums payable to the Bondholders, who are secured creditors, to enable a dividend to either the preferential creditors, or unsecured creditors.

Smith & Williamson, the special administrators for London Capital & Finance (LCF) have posted a progress report covering the six-month period ended July 29, 2020.

The primary focus and main activity in the administration since the last progress report has involved a great deal of investigation work which the administrators believe will result in making significant recoveries for Bondholders. Although the detail of the investigation work has been and remains highly confidential, the administrators say that significant progress has been made pursuant to which they are proposing to give Bondholders and creditors a focused update in the course of the next few weeks.

In addition to the investigation work referred to above, the joint administrators are pursuing other routes for recoveries into the administration, for the benefit of the Bondholders.

Objective 3 (1) (b) of administration is currently being pursued, which is to achieve a better result for the Bondholders/creditors than would have been the case had the Company been wound up (without first being in administration).

A dividend of 2.5% of capital (about £6 million) invested by Bondholders was paid in April 2020 to over 11,000 Bondholders.

Since the last formal report issued in February 2020, the administrators have taken steps to protect LCF’s (and therefore the Bondholders’) interests in other entities which have either been the beneficiaries of LCF monies or identified as a conduit for LCF monies. In this regard, the joint administrators have taken control of entities within the Prime Group which have an interest in the Waterside holiday village in Bodmin, Cornwall and the land sites in the Dominican Republic. (A total of five Prime Group companies were placed into administration in February 2020 and March 2020).

Following the successful removal of GST as the security trustee, LCF, as the principal creditor of GST in respect of the unpaid judgement costs awarded to LCF, petitioned for the compulsory winding-up of GST and Adam Stephens and Finbarr O’Connell were appointed as joint liquidators of GST by the Secretary of State, on July 20, 2020.

Furthermore, LCM, a sister venture owned by Andy Thomson (principal director of LCF), was placed into compulsory liquidation by order of the Court on July 27, 2020, following a petition submitted, on behalf of LCF, by the joint administrators.

It is not anticipated that there will be a sufficient surplus beyond the sums payable to the Bondholders, who are secured creditors, to enable a dividend to either the preferential creditors, or unsecured creditors.

At the outset of the administration, it was expected that as a minimum, 25% of funds invested by Bondholders would eventually be repaid. This percentage is constantly being reviewed and will be updated when it is clear to the administrators that a different percentage is more appropriate, the administrators explain.

The April 2020 dividend is the first tranche to be repaid to Bondholders, leaving at least an estimated further 22.5% to be paid in future dividends, once the Joint Administrators have realised sufficient assets. Each 5% dividend requires net recoveries of about £12 million.

Future realisations are anticipated to arise largely from the sale of investments and also from legal actions to be commenced in the very near future by the joint administrators. This is likely to be a lengthy process, with no significant monies expected to be recovered into the LCF administration estate for at least the next 6 to 12 months.

Read this next

Institutional FX

Euronext reports double-digit growth in FX volume

Pan-European exchange, Euronext has reported a 10 percent rebound in the average daily volume on its spot foreign exchange market. The ADV figure stood at $19.6 billion in January 2022, which is up from December’s $18 billion.

Digital Assets

Voyager subpoenas FTX’s inner circle over Alameda loan

Bankrupt crypto broker Voyager Digital, represented by law firm Kirkland & Ellis, is seeking court approval to subpoena Sam Bankman-Fried’s inner circle, as well as Alameda Research’s former executives.

Retail FX

AvaTrade seals sponsorship deal with F1’s Aston Martin team

Dublin-based forex broker AvaTrade today announced that it has concluded a sponsorship deal with Formula One’s Aston Martin Cognizant team that entails sponsorship rights and other marketing benefits.

Executive Moves

M4Markets onboards Invaxa CEO Marios Antoniou as COO

Seychelles-regulated brokerage firm M4Markets has appointed Marios Antoniou, who has a colorful career within the foreign exchange industry, in the capacity of its Chief Operations Officer.

Digital Assets

GK8 now allows clients to control their digital assets as they would their fiat

“As the institutional market is increasingly turning to self custody, our policy engine empowers them to automate transactions, approvals, and even crucial workflows, while providing the highest degree of security, consistency, governance and control.”

Digital Assets

Retail CBDCs in the UK: “Welcomed” by CryptoUK and R3, but “Dystopian” for ETC Group

“At this stage, we judge it likely that the digital pound will be needed in the future. It is too early to decide whether to introduce the digital pound, but we are convinced preparatory work is justified”, said the BoE and HM Treasury.

Institutional FX

Centroid taps Iress API to provide retail brokers with real-time market data

“It has always been a challenge to have an efficient, elegant solution for market data and order execution for retail brokers, but with Iress we have found absolutely the right partner to add to our client offering.”

Digital Assets

Ramp launches FCA-approved off-ramp product, onboards Brave, Trust Wallet, Ledger

“To obtain and maintain our FCA registration, we must meet and operate within their strict anti-money laundering and counter-terrorist financing standards. This is a huge achievement for us, as compliance is a cornerstone of our business and what we stand for.”

Institutional FX

State Street launches FIX API for Fund Connect ETF platform

“Expanding from proprietary APIs to the FIX industry standard will bring us closer to our goal of 100% digital interactions. This is another example of innovations we’ve brought to our operating model as we celebrate 30 years of servicing ETFs since the launch of SPY.”

<