The hits keep coming for UK mini-bond investors after administrators David Rubin & Partners revealed they are unable to track down £7.9m ($9.8m, €8.9m) of investor money raised by investment firm Asset Life.
The firm went into administration in July 2019, at which time David Rubin & Partners was appointed.
It sold over 700 mini-bonds to around 500 investors promising 8.75% interest.
The administrators’ inability to trace the money was first reported by British newspaper The Times.
According to the joint administrators report, seen by International Adviser, the difficulty stems from the nature of the Asset Life’s business.
It appears that Asset Life did not operate a bank account in its own name and used a network of receiving agents instead, some of which are currently in liquidation themselves, making the recovery even more challenging.
No profits
Joint administrator Asher Miller said: “We understand that the company’s only assets capable of realisation at the date of our appointment are its shareholdings in two investee companies involved in the exploration of mining activities: Aprelskoe Limited, a gold explorer with activities in Kyrgyzstan, and Lori Iron and Steel Limited, an iron ore extraction company with operations in Armenia.
“We have been advised that the only realistic prospect of liquidating these assets would be to sell the shares to the companies themselves, or to a connected party.”
‘Lack of transparency’
“We have also identified that the majority of the company’s investments appear to have been made in connected or associated companies,” Miller added.
“However, it is not clear where the funds raised from investors were ultimately deployed.
“Many of these investee companies are now either dissolved or subject to insolvency proceedings, and the lack of accounting records and the involvement of numerous third-party payment agents has made the task of reconciling the company’s financial affairs extremely challenging.
“Due to the lack of transparent information on the trading transactions of this company, we anticipate that these investigations may take some time.”
He added that he might be forced to trigger the Insolvency Act 1986 powers to “compel the provision of information from third parties”.
Lack of cooperation
Martin Binks was the only Asset Life director that filed a signed statement of affairs to David Rubin & Partners, Miller said, but he did not include the required information regarding assets and liabilities, as well as a list of creditors.
“We are aware that certain individuals previously involved in managing Asset Life were disqualified from acting in the promotion, formation and management of any company following criminal proceedings relating to a predecessor company, Anglo Wealth Limited (AWL),” he added.
The joint administrator found that Asset Life bought a number of its holdings from AWL “in consideration from writing off an intercompany debt”.
Asset Life had ties with defunct mini-bond provider London Capital & Finance as well, which went into administration in January 2019 for mis-selling £236m of mini-bonds to over 11,600 investors.
Binks was an LCF director between 2015 and 2016.
