Blackmore Bond - How Much Money Will I Get Back? What Happens Next?

Blackmore Bond investors are rightly asking what happens next and how much money they might get back?

As with London Capital & Finance it appears that many unsuitable investors put money into Blackmore Bond thinking that it was a low risk way to invest money. Sadly it was not - unregulated mini bonds are very high risk and should never be sold to retail investors especially ones that are led to believe that they are similar to cash.

Blackmore Bond - How Much Money Will I Get Back? What Happens Next?

In terms of how much money investors might get back it really depends what has happened to the company since the last accounts were filed in 2017. At the time of those accounts the company owed £7 million more than the value of its assets. Blackmore have delayed filing their accounts repeatedly and now have missed the date which was 27 December 2019 so are in breach of Companies House legal requirements. It gives an indication of the fate of the company when they have failed to perform even this basic activity which is a requirement of all UK companies to file accounts on time. By hiding their accounts it gives very little information to understand their financial situation which I suspect is deliberate.

https://beta.companieshouse.gov.uk/company/10273135/filing-history

The 2017 accounts have a very key point in them. Blackmore is reliant on new investor money to be able to continue. It has now been nearly 12 months since they stopped advertising new bonds in the UK so this material risk may now have been realised.

The auditors stated in 2017 "there is a material concern over the company's ability to continue as a going concern". It would appear that the company may no longer be a going concern and may be insolvent as it has now been unable to make 2 sets of interest payments to bondholders.

Many Blackmore Bond investors seem to believe that there is an insurance policy in place that will pay out their investment if the company goes bust. Sadly their optimism may be misplaced. The insurance company is based in Costa Rica and there is no evidence of a policy that will pay out even if the insurance company had sufficient money to do so.

Secondly investors seem to believe that the property assets could be sold to pay back the value of their bonds. Again investors may be disappointed. The property assets look to be valued at GDV (Gross Development Value) but most of the development sites appear to have not progressed beyond any planning stages. As such the valuations are likely to be tiny in comparison to the GDV assigned.

Finally the development sites have all been put into separate companies (Blackmore SPVs) which may limit the ability of investors to access the money and may also allow the company to move funds out of the bonds more easily.

In summary the realisations from London Capital & Finance were estimated by administrators to be up to 25% of the value of the bonds sold to investors. So if you bought a £10,000 bond then you would only get £2500 back. Other mini bonds have had much lower recoveries with 94% of investor money lost from Harewood bonds. This would equate to only £600 back from a £10,000 investment.

With the track record of the directors of Blackmore Bond, McCreesh and Nunn with their Blackmore Global fund then it's possible that recovery of investor money may be at the lower end of the scale.

What Happens Next?

Many Blackmore investors are submitting claims of default to the Oak security trustees. If over 50% of bondholders do this then they can put the company into administration to recover any funds available.