The former trustee of London Capital & Finance (LCF) will have to contribute towards the expense of having to find its replacement.
Global Securities Trustees (GST) was removed in December after the UK high court expressed “serious concerns about the conflicts of interest and expertise of those involved”.
A month later, independent trustee Madison Pacific Trust was appointed in its place.
In its latest ruling, however, the high court ordered GST to pay for the costs needed for it to be replaced.
Judge Matthew Marsh said: “There was a singular failure to address the very real conflicts that existed.
“When added to a lack of experience on the part of the directors in acting as trustees with the wishes of the bondholders, the case for replacement was compelling.
“The sight of a trustee clinging to office is unattractive,” he added.
Payment disagreements
But there was a dispute as to what sum GST was liable to pay.
LCF forked out over £350,000 (£429,954, €386,866) in its search for an independent trustee, the court said, and the investment firm proposed GST contribute £150,000.
But the former trustee was only willing to pay £75,000.
Marsh continued: “The bondholders have suffered very substantial losses at the hands of those connected with LCF.
“This gave rise to the need for particular sensitivity to, and the need to pay close heed to, the wishes of the bondholders. Not unreasonably, they saw GST as part of a discredited ancient regime.
“GST clung to its office without regard to the reasonable concerns of the bondholders and placed their own commercial interests first.
“[…] GST acted at all times in accordance with its own commercial interests and not as a fiduciary acting in the best interests of the beneficiaries,” the judge added.
The court ordered the trustee to pay the sum proposed by LCF.
It is not clear from the court documents what will happen to that sum of money.
