The Eco Resources Fund convinced 189 investors to put $61m (£48m, €57m) into building a bamboo plantation in Nicaragua.
An interim report by the liquidator Gordon Wilson said it was likely that Eco and its subsidiaries ERF Ltd and EcoPlanet Bamboo IoM had been insolvent for some time, the Isle of Man Today reported.
“There will almost inevitably be a cost to the public purse of the Isle of Man in order to bring the affairs of the fund and its underlying companies to an orderly conclusion”, Wilson said.
Wilson added that while the public purse can cover reasonable liquidation costs, including costs to investigate and if necessary take action against those accountable for a fund’s failure, the taxpayer cannot be expected to finance the costs of legal action to recover assets.
His report concluded that the fund’s financial woes were principally the result of a collective failure to manage the plantation assets.
Last November, Premier Group notified investors of the Eco Resources fund that it would “begin the process” of liquidating the fund citing a “lack of liquidity”. At the time, the fund had a balance of just £12,545 but owed creditors £2.7m.
A month later, the High Court in Douglas and the Isle of Man Financial Services Authority said it had appointed an inspector to find out what went wrong with Eco Resources Fund and its subsidiary EcoPlanet Bamboo.
The Isle of Man regulator is also seeking the liquidation of the Premier Group (IoM) to be carried out under the supervision of the court.
In March this year, the 189 investors were told they were unlikely to get any of their money back after the fund was ordered to be wound up by the high court, following an application by the Isle of Man FSA.
