London Capital & Finance administrators set to pay small dividend to bondholders

Maria Nikolova

A dividend has been announced by the joint administrators, payable to Bondholders with outstanding claims, of 5% of the total principal invested.

Smith & Williamson, the administrators of failed London Capital & Finance, have published a report outlining the progress in the administration of the company for the six month period ended January 29, 2020.

Let’s recall that Finbarr Thomas O’Connell, Adam Henry Stephens, Colin Hardman and Henry Shinners of Smith & Williamson LLP were appointed administrators of London Capital & Finance on January 30, 2019. Geoff Rowley of FRP Advisory LLP was subsequently appointed as conflict administrator by the Court on October 30, 2019.

LCF effectively ceased to trade in December 2018, following the intervention of the Financial Conduct Authority (FCA), which had concerns over how LCF was conducting its business.

In their report, the joint administrators say that their view continues to be that, based on the anticipated level of asset recoveries, Bondholders should not expect to receive a return in excess of 25% of their original investment. The joint administrators and their advisers are hopeful that this figure may increase but do not consider it appropriate at this point to speculate on the outcome of their continuing investigations into the debts due to LCF and the value of the potential claims the administrators have against various parties.

A dividend has been announced by the joint administrators, payable to Bondholders with outstanding claims, of 5% of the total principal invested. This represents 5% of the estimated total return of 25%.

The dividend is scheduled to be paid in March 2020. The exact date and further details will be confirmed in due course.

The Bondholders’ claims total approximately £237 million as at the date of administration.

Objective 3(1)(b) of Sch B1 is currently being pursued, which is namely to achieve a better result for the creditors, which mostly represents the Bondholders, than would have been the case had LCF been wound up (without first being in administration).

The vast majority of LCF’s assets were the debts due from a number of debtor entities. As at 30 January 2019, the outstanding total amount of debts due was calculated to be £237 million and is continuing to accrue interest. As previously reported, most of the debtors do not have sufficient assets with which to fully pay their debt due to LCF and some are not in a position to make any payment to the company at all.

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