LCF admins continue with legal recoveries as fees rise to £6.89m
The joint administrators for London Capital & Finance (LCF) are continuing with legal proceedings with the aim of recovering around £237m and are exploring other avenues for claims, while racking up £6.89m in total fees so far.
According to Smith and Williamson’s latest progress report, the administrators are confident that “substantial recoveries” will be made which will enable future dividends to be paid to the company’s creditors. These creditors include the Financial Services Compensation Scheme (FSCS).
They added that it is likely that a court date for the hearing of the main proceedings will not be scheduled until 2023 because of the complexity of the case and the number of defendants.
Read more: Five key takeaways from the report on the FCA’s oversight of LCF
The administrators said they are also continuing to explore other potential claims that can be pursued on behalf of the company’s creditors and only those which are expected to generate a “significant net return” to the administration estate will be pursued.
LCF collapsed into administration in January 2019, leaving about 11,000 everyday investors in the dark about the recovery of the £237m outstanding in the portfolio.
Read more: A timeline of FSCS payments to LCF investors
At the end of last year, the LCF creditors’ committee was dissolved because of increasing claims through the Treasury’s compensation scheme, paid out by the FSCS.
In February, the FSCS said that it had contacted 8,500 people, issuing cheques for over 11,500 bonds totalling £105m and vowed that everyone will have received their offer by 20 April. Separately to the scheme, it has paid out £57.6m to 2,871 LCF investors whom it believed had been given bad advice.
The joint administrators said if the majority of the members of the committee were to accept payments under the scheme, the creditors’ committee would become “inquorate”, meaning that they would not have sufficient members to form a quorum.
As a result of the committee ending, the joint administrators said they have to seek approval for their fees from the creditors through a decision process, the outcome of which will be determined by the votes from the FSCS as a majority creditor.
Between 30 July last year and 29 January 2022, the joint administrators racked up £627,518 in time costs from 1,134 hours of work, bringing the total to £6.89m for 17,031 hours. This was up from £587,943 in time costs for the six months to 29 July in which fees hit £6.2m in total. Only £1.5m has been paid so far.
The joint administrators estimated they have also incurred £3.3m in expenses from 30 January 2021 to 29 January this year.
Meanwhile, conflict administrator Geoff Rowley of FRP Advisory Trading LLP incurred 556.75 hours between 30 July 2021 and 29 January 2022, and 1,357.55 hours in total since his appointment on 30 October 2019.
Earlier this year, LCF’s administration was extended until 2024 to take the total process to five years.