Privilege Wealth administrators file final report, total losses for investors

The saga of Privilege Wealth has all but come to an end. In February the administrators of the collapsed minibond scheme filed their final report, before handing the last of the clean-up to the Official Receiver.

Readers and investors will probably be unsurprised that the outcome was 100% losses for investors, despite Privilege Wealth’s claims that its bonds were “low-risk” and “insured”.

It is now clear there will not be a dividend to unsecured creditors.

The administrators were pursuing recoveries from

  • a book of pay-day loans to the Sioux Tribe of Native Americans
  • an insurance policy taken out in the small island nation of Bermuda
  • an £80k default libel judgement against David Marchant of Offshore Alert, who described the scheme as a fraud before it collapsed. The administrators listed the libel damages as a possible asset despite themselves describing Privilege as a “possible Ponzi scheme”.

Evidently these have come to nothing.

Of the £42 million odd put in by investors, a grand total of around £90,000 was recovered. £27,000 went to the administrators (who took a percentage of all funds recovered, which mostly consisted of cash recovered from escrow) and the rest mostly went on legal fees.

If any readers are wondering why I repeatedly warn investors that “asset-backed investment” actually means up to 100% losses if things go south (in the absence of genuine, professional-standard due diligence establishing that the security will have value), this is why.

Mini-minibond scheme also finally folds

A small offshoot, Munio Capital, which raised money from minibonds paying 9.8% per year and took in £813,000 according to its accounts, is also no more after being struck off the Companies House register, presumably after failing to file a confirmation statement.

Back in 2018, after Privilege Wealth collapsed, director Gary Williamson attempted to voluntarily strike the company off the register, which was thwarted by an objection, possibly from a creditor.

The company has now been put out of its misery by a compulsory strike-off, most likely due to the company’s failure to file details of its ownership since July 2018 (a confirmation statement is required at least once annually, and failing to do so is a criminal offence).

The assets of Munio Capital now belong to the UK Government, but as the administrators of Privilege Wealth have confirmed that there is no prospect of a dividend to unsecured creditors, Munio Capital is also near-certain to be worthless.

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