A company which was supposed to distribute funds to customers of Football Index who lost out when the firm went bust in March has reversed a decision to stop making payments.
Last month, a judge approved payments to customers of Jersey-based BetIndex’s service, where investors could bet on the success of footballers.
But on Monday administrators said Index Labs would no longer work with them to distribute the funds.
Index Labs provides the platform that allows the payments to be processed and administrators at Begbies Traynor said that, “without their essential and necessary support, the process cannot be commenced”.
By Tuesday morning Index Labs had reversed its decision, with payments set to be processed again later in the day.
Begbies said: “The joint administrators are pleased to confirm that the board of Index Labs has agreed to process the customer repayments.
“This will begin at approximately midday today and customers will receive communications confirming this.”
The payouts were approved after the High Court heard that BetIndex maintained a client money bank account for the benefit of its 280,000 customers under the terms of a trust.
Judge Robin Vos was also told that there was about £4.5 million in the account when BetIndex went into administration.
He said it had been calculated that the aggregate amount due to customers was about £3.2 million.
The judge said the administrators’ strategy was to enable the business to continue by agreeing arrangements with existing creditors and securing new funding based on a different business model.
Judge Vos said if administrators were successful, they estimated customers might recover about 20p in the pound in respect of unsecured claims.
This compared with an estimated 8p in the pound if the company went into liquidation, he said.
In April, gambling and lotteries minister John Whittingdale announced a review into the circumstances surrounding the collapse of Football Index.
“We know how difficult it has been for people affected by the collapse of Football Index, with some losing significant sums of money,” he said.
“We are setting up an independent inquiry so that we can find out how this happened.”
Judge Vos said Football Index was a “slightly unusual arrangement”.
He said the arrangement was “clearly betting” but was designed to have “some similarities in appearance” with buying and selling a portfolio of shares.
Customers were known as “traders”, he said.
A trader placed a bet by buying a three-year share in a football player.
Winnings came in the form of dividends which were paid depending on the player’s performance on the field and on the number of mentions they got in the media.
Traders could sell their share in a player to another trader, and the price of a share fluctuated as a result of the performance of the player, the judge said.
BetIndex’s income had derived from the amount initially paid by a trader for a share, as well as a 2% commission charged when shares were sold by one trader to another, he said.