Isle of Man Court judge Deemster Doyle has named Michael Simpson of PwC as liquidator of the Eco Fund following concerns that the other candidate, Gordon Wilson of CW Consulting, was too involved with the IoMFSA and carried too much “baggage” related to the fund.
The collapse
The Eco Fund, which convinced 189 people to invest $61m (£46m, €51m) in bamboo plantations in Nicaragua and South Africa by promising returns of up to 500%, was would up by order of the IoMFSA in March 2016.
Wilson was named provisional liquidator and deemed official receiver of the Eco Fund by the Isle of Man regulator on 16 March 2017. He had already assumed control of the affairs of Eco on 22 December, having been appointed adviser to the fund in June 2016, again by the IoMFSA.
Eco Funds was set up in 2012 by The Premier Group, the company behind the stricken New Earth Group of Funds that were wound up by the island’s regulator in July 2016.
Shareholders voted against liquidation on 20 December 2016, following which all three directors of the fund resigned as they felt the result was a vote of no confidence.
The Premier Group resigned as manager of the fund on 7 February 2017.
Cost the public purse
In April 2017, Wilson reported that it was likely that Eco and its subsidiaries ERF Ltd and EcoPlanet Bamboo IoM had been insolvent for some time.
“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.
He 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.
Liquidator replacement
On 19 May 2017, John Bourbon, a former director of the Premier Group and a creditor to the Eco Fund for £254.06, sought the appointment of Simpson as liquidator.
According to court documents, Bourbon believes that Wilson’s involvement with the beleaguered fund had led to a deterioration of its position and would continue to do so.
He argued that “the prospect of any meaningful recovery for Eco’s members will almost certainly be lost if Mr Wilson continues to be involved with Eco”.
He added that the overwhelming majority of Eco’s creditors and 100% of members with voting powers were against the appointment of Wilson but would welcome Simpson.
Bourbon claims that Wilson’s unwillingness to consider alternative options, such as a refinancing deal in June 2016, is another reason he should be replaced.
Delaware-based Sustainable Assets Lending (SAL) loaned $6.3m to two Eco Fund companies that were due to be repaid in full by 31 December 2016. In January 2017, Wilson was informed that SAL had foreclosed on the loans.
Bourbon said: “SAL is not prepared to deal with any entity associated with Mr Wilson. Mr Simpson will have the co-operation of and an untarnished relationship with [Eco founder] Troy Douglas Wiseman and will have the option of a restructuring or refinancing exercise and creditors could be paid off immediately.
“A speedy liquidation, as envisaged by the [IoMFSA], would mean that the Isle of Man would find itself the focus of a failed investment scheme which would do little for its reputation”
FCA rebuttal
The island’s regulator responded that it was concerned that there had been misleading statements made “about Mr Wilson and, by association, the [IoMFSA]”.
Wilson has categorically denied the allegations made against him.
Claire Whitelegg, a senior manager in IoMFSA’s banking, funds and investments division, said in a statement in June that the regulator “considers the appointment of Mr Simpson not to be appropriate because it may lead to further expense and further delay in the winding up of Eco, which is the fundamental purpose of the liquidation”.
Christopher Brooks, counsel for the IoMFSA, said that the accusation that Wilson caused the collapse of the June 2016 attempted refinancing “seems difficult to maintain in light of the evidence”.
