The Financial Conduct Authority has entered into a conditional agreement with the two directors of a number of companies involved or connected to the Park First Scheme.
Over 4,600 investors put £230m ($317m, €268m) towards the unauthorised parking investment scheme which promised 12% returns.
It offered investments in multi-storey car parks at airports around the UK for up to £25,000 per parking space.
But in October 2019, the regulator took legal action against the company and its senior management to force them to refund clients.
The conditional agreement will only go ahead if Park First investors approve the company voluntary arrangements (CVA).
The FCA said the agreement provides a further £25m to investors on top of the £33m that was secured by the watchdog from the sale of the car park at Luton airport.
Park First chief executive Toby Scott Whittaker will need to realise most of his assets to pay the £25m, which will be given to victims in instalments on the sale of the assets, the FCA added.
If any round of redress is unpaid, Whittaker agreed “not to contest the debt for the purpose of any bankruptcy proceedings brought by the FCA”, the regulator said.
If the CVAs are approved, the former directors of Park First will agree that they breached section 19 of the Financial Services and Markets Act 2000 (FSMA) by operating a “collective investment scheme without being authorised by the FCA as required”.
But if investors do not approve the arrangements and conditional agreements, the FCA’s court proceedings against the former directors will continue.
The hearing is fixed for February 2022.
‘Willingness’ to compensate investors
Mark Steward, executive director of enforcement and market oversight at the FCA, said: “The agreement, if approved, represents a better outcome in the proceedings for investors than could have achieved through continued legal action, given the financial position of the parties.
“It also gives investors the final say on the merits of the conditional agreement.”
Emma Thompson, joint administrator of the companies associated with Park First, said: “After many months of lengthy discussions between the parties, I’m pleased that investors and creditors can now benefit from an enhanced return.
“Investors and creditors will have the ability to choose whether the CVA proposals are acceptable and, if they are, whether to continue to be invested in the car parking business or to exit their car parking investment. In both cases investors and creditors will receive a CVA dividend.
“I’m acutely aware of investors and creditors frustrations as to the time it has taken to be able to move forward, however, the enhanced returns that they stand to receive mean it was worthwhile.
“We will be in touch with the investors and creditors to answer the very important question as to ‘what comes next?’ very soon, and so we ask that investors and creditors do not contact the joint administrators until they hear from us as regards the way forward.”
Andy McGill, partner at Smith & Williamson and joint administrator of the companies, added: “The fact that the respondents have agreed to settle at a substantial level, in line with their financial positions, shows a willingness to see investors and creditors compensated as best as possible.”
