Smith & Williamson has told London Capital & Finance (LCF) bondholders that it might take several years to recover their money.
This is because of the complex nature of the “flow of funds” and the numerous transactions made, which the administrator admitted has complicated its investigation.
“Undoubtedly, there will be a significant number of legal actions that may be required by the joint administrators to achieve this, over a period of time,” Smith & Williamson said.
It added that it expects bondholders to receive around 25% of their original investment, which is going to be repaid in 5% increments.
But while the administrator predicted that the first dividend would be paid out by the end of this summer, it is “now likely to occur later than originally hoped”.
Over 11,600 investors have been caught in LCF’s net, with the firm owing more than £236m ($288.2m, €260m) worth of mini-bonds.
Targeting the directors
Smith & Williamson said it has also approached a current and a former director of LCF, Simon Hume-Kendall and Andy Thompson, as they are believed to have transferred “many millions of pounds” into their personal possessions or control.
The administrator has asked them to pay the sum into escrow “for the benefit of the LCF bondholders”, to which they have verbally agreed.
“It is unfortunate that the administrators are being required to deal with a concerted and very likely coordinated exercise on the part of a number of individuals aimed at frustrating the joint administrators’ enquiries, for their own reasons,” Smith & Williamson added.
“This approach causes delay and additional expense to the joint administrators’ objectives, to the prejudice of bondholders and so is most unwelcome.”
The mini-bond firm is also facing an independent investigation led by Dame Elizabeth Gloster.
