Isle of Man
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CHP 11/0097 - Foundations Program Plc (in liquidation) ("FPP")
CHP 11/0098 - FPA Limited (in liquidation) ("FPA")

Update 9 April 2015

Please read this update in conjunction with the 1 August update which sets out the background and defines terms.


Foundations Program plc - in liquidation ("FPP")
FPA Limited - in liquidation ("FPA")
Joint Liquidators and Joint Official Receivers ("JL&JORs")

Note for Participants and Loan Note Holders (LNHs) and other creditors of FPP & FPA

Update and general explanation of JL&JORs next steps relevant to the liquidations of FPA and FPP

Points valuations

The last update set out the position with regard to the allocation of points to each Participant that are used to calculate the Participants' obligations to make good the losses of the Program. Specifically, reference was made to the Participant asserting that he had not been validly assigned to the Program. The JL&JORs set out their position based on the legal advice that they had received. The Participant concerned has now taken steps to 'freeze' the policies by putting the life company on notice of the dispute and it would appear that the life company will not release the policies unless supported by a court order. This would now appear to bring the matter to a head and that the Participant, the JL&JORs and/or the life company will be required to commence proceedings.

As has been referenced before, changes to the points of one Participant result in changes to the allocation of losses to all and reluctantly, the JL&JORs have concluded that a final statement of points cannot be issued until the objection from the Participant is resolved.

Policy redemptions

When the last update was posted the JL&JORs had completed the sign off processes required for the redemption of the life policies and delivered them to the life companies. The JL&JORs had anticipated that by the end of March a sufficient, perhaps large majority, of the policies would have completed the process. Unfortunately this has proved to be an optimistic timeframe. As it stands today 46% of the policy surrenders have been completed and this is not enough to enable the JL&JORs to make any assessment of a possible distribution.

Many of the policies were invested in single products, usually index linked, and these have been redeemed quickly. However, there are a substantial number that hold porfolios of investments, often in mixed funds and equities. It appears that these are taking longer for the relevant life companies to dispose of. This is disappointing, but the JL&JORs cannot influence or speed up the disposal process. As soon as the redemptions reach a more substantial level, a further update will be made.

Bank repayment

The policy redemptions to date have provided sufficient funds in USD to discharge the loan from the Bank in this denomination and repayment has been completed. The GBP redemptions are not yet sufficient to discharge the remaining GBP loan, but it is expected that this will be done within a week.

Other recovery actions

The JL&JORs have received the initial sanction of the Court to issue proceedings on behalf of FPA to seek to recover monies 'lost' as a result of the issuing of loan notes by FPA without receiving the proceeds of the loan note sale. All Participants and Loan Note Holders should by now have received either electronically or by post a copy of the sanction application, the supporting witness statement and the Court Order.

If these documents have not been received and you believe you are entitled to them please contact our advocates Callin Wild by email to Callin Wild.

Note: Any objections by Participants or Loan Note Holders to the continuance of the Sanction process and the proceedings must be sent to Callin Wild by 27 April 2015 (in accordance with the Court Order).

Interim distribution

The assessment of an interim distribution is totally dependent upon the policy redemptions discussed above. Until the JL&JORs are able to assess the free cash available, no distribution can be considered. The JL&JORs are extremely mindful of the desirability of making a distribution and will report back to the creditors at the earliest opportunity.

9 April 2015