Secured Energy Bonds moves into liquidation, still no news on IPM value

Secured Energy Bonds, which collapsed in 2015 owing £7.5 million to investors, has been moved from administration to liquidation.

Throughout the administration the administrators have recovered £289,000 from SEB’s assets, and spent almost all of it. £275,000 has been spent on the costs of the administration, mostly administrators’ fees (£85k), legal fees (£107k) and VAT (£43k).

Other than shares in BlueNRGY Group, which is still attempting to regain entry to the NASDAQ market and whose value is unknown, the main item on SEB’s books is an outstanding claim of £5.8 million plus costs against Independent Portfolio Managers, the FCA-authorised company that signed off SEB’s misleading literature.

IPM was placed into liquidation in November 2018. The administrators of Secured Energy Bonds, Grant Thorton, were also appointed liquidators of IPM in December 2018.

There’s been no public updates on the IPM liquidation since then. In their report on SEB, dated February 2019, the administrators say that investigations into the financial affairs of IPM are in their early stages, and it is too early to comment on whether there will be any realisations. IPM’s last accounts from March 2016, which reported net assets of only £130k, give SEB investors little hope of any substantial recoveries.

SEB investors may in any case no longer have any interest in the administration, as the Financial Services Compensation Scheme has begun paying out claims to them and investors in Providence Bonds.

The FSCS has confirmed that as of 12 April 2019, it has paid out a total of £373,900 in relation to claims against Providence and Secured Energy Bonds. While this is a small fraction of the c. £15 million invested across both companies, it has confirmed that “a large number” of claims are still in progress.

Secured Energy Bonds administrator seeks £5.6 million from the ashes of Independent Portfolio Managers

The administrators of Secured Energy Bonds have posted their latest six monthly update, which can be read in full on Companies House.

So far the administration has realised £288,579 in assets, of which £272,905 has been paid out in administration costs, predominantly the administrators’ own fees and the fees of their legal advisors (and VAT). According to a schedule in Appendix B, a further £169,842 has been incurred in legal fees to date but not yet paid out. Bondholders’ claims stand at £7.5 million.

SEB still owns 13,959,588 shares in BlueNRGY Limited, which has been attempting to gain readmission to the NASDAQ stockmarket for some years. BlueNRGY is now apparently undergoing yet another restructuring and whether its listing will be successful is unknown.

The administrators and their legal advisors Bird & Bird have identified a £5.6 million legal claim against Independent Portfolio Managers, who approved SEB’s literature and acted as a Security Trustee – and have been ordered to compensate SEB investors by the Financial Ombudsman.

A letter before action was sent by the administrators to IPM in November 2017. IPM responded to say they disputed the claim and didn’t have any insurance to pay it anyway.

The administrators therefore elected not to go to court and instead issued winding up proceedings against IPM, as a consequence of which IPM was put into liquidation about a week ago.

According to IPM’s last accounts filed March 2016, IPM had only £128,475 in net assets. As for how much is left nearly three years later, who knows, although the liquidators will eventually find out.

In addition, there is the small matter of SEB investors who have claims against IPM in their own right thanks to the Ombudsman awards – and also the Providence Bond investors who have similar claims. In theory, these would rank alongside SEB’s claim against whatever assets IPM has. Even if SEB and Providence investors are compensated by the Financial Services Compensation Scheme, when the FSCS compensates an investor the FSCS often takes their place as creditor of the collapsed company.

Although anything recovered by SEB from IPM could in theory pass to the bondholders, if you look at the legal costs incurred to date, the chances appear high that any recoveries will be swallowed up in legal costs.

Let the follically-challenged fight over a comb commence…

Secured Energy Bonds administration continues to drag on – no funds recovered for investors

Secured Energy Bonds raised £7.5 million from investors promising returns of 6.5% per annum. In 2015 the company went bust and administrators were appointed.

The administrators published their latest progress report on 3rd January.

The report makes it clear that it is extremely unlikely that investors will see a penny of their money back. In total, the administrators have recovered £109,000 net from Secured Energy Bonds plc, after legal and other costs. The administrators’ costs currently stand at £561,000, none of which has yet been paid.

This means that as it stands, the costs of the administrator (who always stands first in the queue) will swallow up all of the money recovered from Secured Energy Bonds, and the investors will receive nothing.

It seems extremely unlikely that any further assets realised by the administrators will be sufficient to cover the costs they have already incurred, and any further costs that will be clocked up as the administration continues.

The claim that these bonds were “asset-backed” was, as with Providence Bonds which collapsed a year later in 2016, completely worthless.

Sale of SEB’s assets

In 2017 the administrators managed to sell two of SEB’s subsidiaries, SEB Mercury and SEB Venus, for £203,150. The sales process was protracted due to the initial preferred purchaser withdrawing after conducting due diligence.

£17,197 was received in final dividends from interests in CBD Energy Limited and Westinghouse Solar Pty Ltd, which also went bust.

The administrator also received 13,959,588 shares in BlueNRGY Group Limited. Whether these are of any value depends on whether BlueNRGY manages to successfully relist itself on NASDAQ – in its latest SEC filing it states “there is no assurance that we will be successful in doing so”.

Ongoing Financial Ombudsman case

Investors in Secured Energy Bonds have launched a Financial Ombudsman complaint against Independent Portfolio Managers, over its role in promoting and acting as “Security Trustee” for Secured Energy Bonds. Initially, the Ombudsman declined to consider the complaint on the grounds that the SEB investors were not customers of IPM, but it reversed this decision in 2017. When the Ombudsman will issue its ruling is not known.