The latest update from the Blackmore Bond administrators reveals that investors may be facing total or near-total losses.
Potential gross recoveries have been revised from £5 million down to less than £1 million, due to the difficulty of selling properties / building sites as a forced seller during the pandemic, and the fact that Blackmore borrowed money from expensive short-term lenders whose security over the properties outranks the bondholders.
With the administrators’ costs and legal costs already standing at over £1 million, which also stand ahead of Blackmore’s ordinary investors in the queue, this means bondholders are facing total losses.
The prospect of total losses stands in stark contrast to Blackmore‘s marketing material which claimed the bonds provided “simple, fixed-rate returns with income certainty” and were “fully insured against insolvency through our comprehensive Capital Protection Scheme”.
This “Capital Protection Scheme” consisted of insurance policies arranged through Ion and Northern Surety Company (also referred to as Northernlights Surety). Whether these will actually provide any recompense to investors is unclear. The administrators note that they are not responsible for claims on these, as this is in the hands of Blackmore’s Security Trustee, Oak Fund Services (Guernsey).
Blackmore raised £46 million via its unregulated bonds which were sold to the public by the same marketing company as London Capital and Finance.