LCF Administrators Issues - Concerns over Smith & Williamson's Role
The administrators appointed by LCF and approved by FCA and the courts to manage the company have already raised concerns over their actions.
The first issue is the fact that S&W have already referred to those who bought bonds as ALL being High Net worth or sophisticated investors which might limit action about mis-selling and certainly goes against the FCA ruling from last week. The majority of people I've seen saying they are bondholders are definitely not in this category and people putting their life savings into LCF bonds thinking it's a savings product do not meet the criteria.
Secondly I thought the interview with Finbarr of S&W on BBC Moneybox was very odd. On the one hand was saying it was early days but alongside that saying that all money was accounted for in loans that were being repaid, assets in place and sounding like it was a very positive situation. If it's early days then surely it is far too early to know. The loans being repaid by borrowers does not stack up with the information provided by the publicly available accounts for those companies.
Also claiming that there was only 12 loans is slightly misleading. LCF may have only lent money to 12 companies but at least some of those companies have lent money on to multiple companies themselves. One example is London Oil and Gas that is shown to have made loans to both Independent Oil & Gas and Atlantic Petroleum. This multi layer lending will make analysis of the recovery prospects much more difficult.
The biggest red flag to me was that LCF had 11 borrowers in 2017 when the loans totalled £58 million, so an average of £5.2 million per company. With the current total at £236 million there are still only 12 borrowers which means that existing ones have been lent massively more money rather than spreading the risk across more companies with an average per company of £19.6 million now. With London Oil and Gas taking up to £50 million of that it still means some very big loans to companies that are not trading.
Hopefully the Administrators attention to detail is better for the work they are doing with the administration than their website when they manage to get a typo in the company name - it's not London Captial Finance!
The companies loaned money by LCF have charges on their accounts showing LCF has a right to some of their assets. The companies that have these charges from their public accounts are these:
Charges to London Capital & Finance PLC
The first issue is the fact that S&W have already referred to those who bought bonds as ALL being High Net worth or sophisticated investors which might limit action about mis-selling and certainly goes against the FCA ruling from last week. The majority of people I've seen saying they are bondholders are definitely not in this category and people putting their life savings into LCF bonds thinking it's a savings product do not meet the criteria.
Secondly I thought the interview with Finbarr of S&W on BBC Moneybox was very odd. On the one hand was saying it was early days but alongside that saying that all money was accounted for in loans that were being repaid, assets in place and sounding like it was a very positive situation. If it's early days then surely it is far too early to know. The loans being repaid by borrowers does not stack up with the information provided by the publicly available accounts for those companies.
Also claiming that there was only 12 loans is slightly misleading. LCF may have only lent money to 12 companies but at least some of those companies have lent money on to multiple companies themselves. One example is London Oil and Gas that is shown to have made loans to both Independent Oil & Gas and Atlantic Petroleum. This multi layer lending will make analysis of the recovery prospects much more difficult.
The biggest red flag to me was that LCF had 11 borrowers in 2017 when the loans totalled £58 million, so an average of £5.2 million per company. With the current total at £236 million there are still only 12 borrowers which means that existing ones have been lent massively more money rather than spreading the risk across more companies with an average per company of £19.6 million now. With London Oil and Gas taking up to £50 million of that it still means some very big loans to companies that are not trading.
Hopefully the Administrators attention to detail is better for the work they are doing with the administration than their website when they manage to get a typo in the company name - it's not London Captial Finance!
The companies loaned money by LCF have charges on their accounts showing LCF has a right to some of their assets. The companies that have these charges from their public accounts are these:
Charges to London Capital & Finance PLC
- International Resort Group PLC
- Leisure & Tourism Developments PLC
- CV RESORTS LIMITED
- LONDON POWER MANAGEMENT LIMITED
- London Oil & Gas Ltd
- London Group Llp (owns London Group Ltd)
- Waterside Cornwall Group Ltd (charge to LCF)
- Colina Property Holdings Ltd
- Colina Support Ltd
- Costa Support Ltd
- Costa Property Holdings Ltd
- Prime Resort Development Ltd
- Riverview Equestrian
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