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Bond Giant LC&F collapse, creating doubt for thousands of investors

1 February 2019

Bond Giant LC&F collapse, creating doubt for thousands of investors

Bond giant, London Capital & Finance collapsed into administration, leaving more than 15,000 investors at risk and high in doubt.

More than £225 million was raised from investors, with attractive interest rates of 8%, encouraging many pensioners and small businesses to invest here. Some bondholders invested over £100,000.

However, it became apparent that the company’s products, which appeared to be independently marketed on price comparison sites, were actually ran by the director of Surge, the bond giants outsourced marketing partner. Mini-bonds were sold, yet unregulated by the FSCS. Following this, the Financial Conduct Authority began an investigation, just before Christmas 2018, which restricted them to raise any more money or touch any assets. The company were deemed to be misleading in its activities.

Smith & Williamson LLP were appointed joint administrators by the company directors, with this being filed by the High Court yesterday (30th January 2019). There was discrepancy over this appointing act; news spread that LC&F filed for administration first, rather than external creditors. This angered Jane Sanders of JSCS, unregistered barrister and claims handler, who demanded that bondholders should be able to choose their own administrator, at the first creditors meeting.

‘’We need to hire somebody who specialises in getting money back for investors, and it should be bondholders choosing them, not the company itself’’.

The amount bondholders will get back, if any, is a doubtful consideration.

Finbarr O’Connell, administrator stated: ‘’It is early days, but our role will be to work with LCF’s borrowers, staff, the Security Trustee for the Bondholders, the FCA and other stakeholders to ascertain what needs to be done in order to maximise the returns to the bondholders. We are especially focusing on the various loans made by the company to borrowers. At this juncture, regrettably we are not in a position to return any monies to bondholders.’’

All bondholders will be contacted, and a dedicated call centre and email system has been created. There is much work to be done, so administrators ask bondholders to ‘’bear with us in these early stages’’.

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