London Capital and Finance

bail-in

Regarding the recent FCA restrictive notice on the londoncapitalandfinance.co.uk and lcaf.co.uk websites here are the FCA links for the reasons behind it:

https://www.fca.org.uk/news/statements/statement-london-capital-finance-plc

https://www.fca.org.uk/firms/financial-promotions-adverts/powers-ban

Sledger

Hi Bail in not good news as a bond holder just saw this. posted today

Information for London Capital and Finance PLC investors
News stories Published: 28/12/2018 Last modified: 28/12/2018
The FCA is conducting an investigation into the affairs of London Capital & Finance Plc (LCF). In addition, the FCA has imposed certain requirements on LCF including: It may not (without the prior consent of the FCA) deal in any way with its assets, including the money held in its banks accounts. It must cease conducting all regulated activity.

Alexland

Only time will tell if there are any material assets remaining in the business. My view is the authorities should have acted earlier.

Alex

bail-in

This may be good news for bondholders as I am assuming the FCA have frozen bondholder assets thereby protecting them if there is any wrongdoing. A stitch in time saves nine. Many people in these forums and outside them have pointed out shortcomings to the FCA in relation to LCF due diligence failures, nondisclosure, misleading advertising and so on. Perhaps they have decided after all to investigate. If all is well LCF can trade again with greater strength if the FCA gives a clean slate. But it is highly unlikely the LCF take down, if it applies to this wider extent rather than just misleading advertising, would be ordered unless the FCA have major concerns. Whatever happens u can be sure HMRC, the liquidators, accountants, lawyers and other debtors will get paid before bondholders.

Alexland

https://www.fca.org.uk/news/news-stories/information-london-capital-and-finance-plc-investors

The FCA believes there are approximately 14,000 customers invested in its bonds.

Alex

bail-in

Re the FCA latest news for London Capital and Finance Plc investors about the LCF take down, posted by Sledger above, the link to the full FCA text is:

http:// https://www.fca.org.uk/news/news-stories/information-london-capital-and-finance-plc-investors

masonic

bail-in wrote: »

This may be good news for bondholders as I am assuming the FCA have frozen bondholder assets thereby protecting them if there is any wrongdoing. A stitch in time saves nine. Many people in these forums and outside them have pointed out shortcomings to the FCA in relation to LCF due diligence failures, nondisclosure, misleading advertising and so on. Perhaps they have decided after all to investigate. If all is well LCF can trade again with greater strength if the FCA gives a clean slate. But it is highly unlikely the LCF take down, if it applies to this wider extent rather than just misleading advertising, would be ordered unless the FCA have major concerns. Whatever happens u can be sure HMRC, the liquidators, accountants, lawyers and other debtors will get paid before bondholders.

AIUI, bondholders' money was loaned to small businesses, property developments etc. The FCA's enforcement action could starve these ventures of funds and cause the businesses and developments to fail. Business assets and part-completed developments may eventually need to be liquidated at fire-sale prices to release bondholder funds. Perversely, this could lead to a worse outcome than if the FCA had not intervened. Although clearly action in some form was needed to protect those not yet tied up in this mess.

Malthusian

masonic wrote: »

AIUI, bondholders' money was loaned to small businesses, property developments etc. The FCA's enforcement action could starve these ventures of funds and cause the businesses and developments to fail. Business assets and part-completed developments may eventually need to be liquidated at fire-sale prices to release bondholder funds. Perversely, this could lead to a worse outcome than if the FCA had not intervened.

If the sustainability of the scheme depends on a continued inflow of new investors' money in the way you suggest, then collapse is inevitable whether the FCA intervened or not.

The music has to stop eventually.

If LCF's business has been operated properly, then the success of its underlying investments should not depend on putting further money in indefinitely. The feasibility of whatever project the loan is funding should not depend on sinking even more money in from as-yet-unraised new investment in the future.

masonic

Malthusian wrote: »

If the sustainability of the scheme depends on a continued inflow of new investors' money in the way you suggest, then collapse is inevitable whether the FCA intervened or not.

The music has to stop eventually.

If LCF's business has been operated properly, then the success of its underlying investments should not depend on putting further money in indefinitely. The feasibility of whatever project the loan is funding should not depend on sinking even more money in from as-yet-unraised new investment in the future.

The scheme would have to depend on a continued inflow of new investors' money, not only to meet redemptions of existing members fixed-term bonds at maturity, but also to meet the demands of multi-tranche development loans. I can't see many investors reinvesting their maturing bonds.

It would be the same story for any legitimate black box P2P lending platform with fixed term investment products that do not match the duration of the underlying loans written using the funds. Let's hope LC&F have enough capital reserves to repay maturing bonds and can manage their loan book to avoid becoming insolvent themselves.

Malthusian

bail-in wrote: »

Whatever happens u can be sure HMRC, the liquidators, accountants, lawyers and other debtors will get paid before bondholders.

On the count of liquidators yes; they always come first (otherwise they wouldn't do the job).

On the count of HMRC probably no, possibly yes up to a point. Following the last Budget, HMRC will now have preferential status for taxes collected on its behalf like NI contributions, but not for other taxes such as corporation tax. This only applies if LC&F become insolvent after April 2020; if they become insolvent before that date, the previous rules apply and HMRC will be at the back of the queue with investors and all other unsecured creditors.

In every other case no; creditors who aren't secured creditors will be lumped in with the investors as unsecured creditors.

As yet LC&F is not actually insolvent, even though the FCA has shut down their bank accounts and consequently repayments to investors have been suspended. For all anyone knows, they may be completely solvent once the FCA lets them have control of their bank accounts back.

It is very common for investors in unregulated investments to lose all their money when the scheme collapses. Not because HMRC and others are ahead of them in the queue (they aren't); because the money is already gone.