London Capital & Finance Plc - Case Update

The Joint Administrators of mini bond provider London Capital Finance Plc have revised their estimated returns to secured creditors due to valuation issues and the need to expend significant sums to realise certain assets.

The company entered administration on 30 January 2019, after the FCA took action against it for marketing its bonds in a misleading, unfair and unclear manner. Finbarr O’Connell, Adam Stephens, Colin Hardman and Henry Shinners of Evelyn Partners were appointed Joint Administrators.

Since the Joint Administrators’ appointment, the FSCS has paid out c.£58m to bondholders under its own compensation scheme and over £114m in respect of the HM Treasury Scheme. Consequently, the FSCS is now the majority creditor of the company.

In December 2020, the Joint Administrators issued claims against 15 defendants seeking to recover c.£237m of bondholders’ funds. The proceeding is due to commence in early 2024. The Joint Administrators have obtained a funding facility to allow them to progress with their investigations and ongoing legal claims. A number of specific litigation funding facilities are also being negotiated with litigation funders, in the event that they are required.

However, the Joint Administrators have modified their estimate of anticipated secured creditor returns from the 25% range to 10-18%. The Joint Administrators explain that the change is due to the valuation of certain assets, as well as future costs to be spent to realise certain assets. The timing of any payment is unclear at this time.

The Joint Administrators have been assisted by Mishcon de Reya. Their proposals can be found HERE.