Bondholders of collapsed London Capital & Finance have been told they face costs of at least £22.3 million in fees from the administrators, lawyers and other professionals hired to recoup their losses.
The huge bill covers the first two years of the administration of LCF and an affiliate to which it lent bondholders’ money, London Oil & Gas.
Administrator Smith & Williamson is trying to recover the £236 million investors gave LCF to invest. The firm has been appointed over both LCF and London Oil & Gas.
Those who bought into LCF bonds are becoming angry at what they see as the high bills and the low amounts of money they have yet received.
In a letter to Smith & Williamson, the bondholders appear particularly aggrieved that fees are rising while a promised 5% “dividend” payment from money so far recovered had been cut in half due to coronavirus. They had hoped to be paid more because LCF’s one seemingly decent investment, into the Aim-listed North Sea explorer
Independent Oil & Gas, had paid back £17.1 million.
S&W responded that it had not been able to make the repayment in full due to “costly, and ultimately unsuccessful” legal actions from LCF-connected businessmen Simon Hume-Kendall and Elten Barker.
S&W told the Evening Standard: “Costs in the administration of LCF are high. We have had to sift through over two million documents and track tens of thousands of transactions to work out where bondholders’ money has gone. Unnecessary and, we believe, vexatious legal challenges by parties connected to London Oil & Gas and LCF have also added significantly to the costs. We firmly believe returns to bondholders from this work will significantly outweigh the costs.”
The Serious Fraud Office is investigating events around the collapse of LCF.and recently said it was extending its probe further back in time.