Mini-bond Investors Face Another Hammering as Basset & Gold Goes Bust
Basset & Gold, a sponsor of West Ham United, has become the latest high risk mini-bond company to go into administration after putting the majority of investors’ funds into payday lender Uncle Buck, which collapsed last week.
In communications with investors, it blamed coronavirus, but its main investment has been in trouble for months; it is not clear how much money will be recoverable by investors.
The mini-bond provider is believed to have around 1,800 customers who had collectively invested £36m.
‘Basset & Gold Plc and [related company] B&G Finance took independent solvency advice after the Financial Conduct Authority (FCA) raised concerns about the viability of the B&G mini-bond scheme because the money raised from the mini-bonds was almost entirely invested in Uncle Buck,’ said a statement on the FCA’s website.
‘In light of this advice, and following the entry into administration by Uncle Buck, the directors concluded that both of the firms were insolvent and took the necessary steps to place the firms into administration.’
Basset & Gold, which is not regulated by the Financial Conduct Authority (FCA), issued mini-bonds which were sold to retail investors; it also offered an Innovative Finance ISA that was managed by third-party ISA manager Gallium.
B&G Finance, which is regulated by the FCA, acted as an intermediary between the company and investors, arranging investments in the bonds sold by the company.
‘many investors have a good prospect of claiming compensation due to the way that the B&G mini-bonds were sold and marketed’
The Financial Services Compensation Scheme (FSCS) has determined that many investors have a good prospect of claiming compensation due to the way that the B&G mini-bond was sold and marketed.
A statement on Basset & Gold’s website revealed that Harrisons Business Recovery and Insolvency has been appointed as administrator of Basset & Gold and B&G Finance, a related company.
‘The joint administrators will conduct an orderly wind down of the business and seek to recover the assets of the company for the benefit of its creditors,’ said the administrators’ statement.
‘The joint administrators will also conduct an orderly wind down of the business of B&G Finance and seek to recover the assets of that company for the benefit of its own creditors.’
The administrators will assess the firm’s assets and put forward proposals to investors within eight weeks of appointment, which will include the process of how to make a claim.
Basset & Gold scaled back its UK operations late last year amid negative sentiment surrounding mini-bonds after the London Capital & Finance collapse.
The FCA also revealed that it had concerns around the accuracy and fairness of the firm’s financial promotions of its mini-bonds.
‘As a result, B&G Finance made improvements to its advertising in December 2018 and wrote to all bond holders in January 2019 clarifying that B&G has used ‘the vast majority of bond proceeds to finance a large facility agreement with an FCA-regulated short-term consumer lender’,’ the FCA said.
Harrisons Business Recovery is also administrator to Uncle Buck.
The FCA became concerned Uncle Buck had been lending without adequate capital resources following the release of its accounts in January which revealed a fast-growing loan book but a deteriorating financial position.
The regulator said it ordered it to raise more capital but the company was unable to do so.
No further bonds were issued to retail investors from May 2019.
ISA holders can contact HMRC by email at email@example.com with regard to any specific questions they have relating to the ISA rules.