London Capital & Finance’s (LCF) administrators’ fees hit £6.2m by 29 July and are expected to reach £7.7m by the end of January.
According to their latest progress report, filed with Companies House, joint administrators Smith and Williamson and FRP Advisory racked up £587,943 in time costs for the six months to 29 July.
The cumulative total of £6.2m was made up from 15,849 hours charged at an average hourly rate of £393. This is up from the £5.6m total that was reported in the previous administrators’ report in March, while the £7.7m estimate for the end of January 2022 has remained the same.
Meanwhile, four professional advisory firms, comprising Maybern Consulting, Mishcon de Reya, Farrer & Co and Pinsent Masons, have charged total costs of £4.2m.
Mini-bond provider LCF collapsed into administration in January 2019, leaving around 11,000 everyday investors in the dark about the recovery of funds. At the time of the platform’s collapse, there was around £237m outstanding in the portfolio.
In April this year, the government took the unusual step of announcing that it would establish a scheme to compensate bondholders.
The scheme will pay out 80 per cent of LCF bondholders’ initial investment up to a maximum of £68,000 and expects to pay out around £120m compensation to around 8,800 people in total.
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In May, the government announced that the Financial Services Compensation Scheme (FSCS) will take charge of the scheme.
The scheme, which has not opened yet, will be open to all LCF bondholders who have not already received compensation from the FSCS.
Separately to the scheme, the FSCS has already paid out £57.6m in redress to approximately 2,871 customers which it believes had bad advice but has stopped short of further payments.
In April last year, the joint administrators paid a dividend to over 10,000 bondholders that totalled around £6m. They said bondholders will receive further dividends when more assets are realised, but these are likely to be paid by the FSCS if the government-backed compensation scheme is operational by then.
Last month, a group of LCF bondholders withdraw their judicial review appeal against the FSCS relating to the level of compensation, because they could not afford to pay the FSCS’ £600,000 legal fees if they lost.
If successful, the appeal would have resulted in full pay-outs being due in respect of all investments in LCF made on or after 3 January 2018.