CHP 11/0097 - Foundations Program Plc (in liquidation) ("FPP")
CHP 11/0098 - FPA Limited (in liquidation) ("FPA")
Update 6 August 2015
Please read this update in conjunction with the 1 August 2014 update which sets out the background and defines terms.
Glossary
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 - amended
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 life company concerned is 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. Whilst this will not prevent the payment of an interim distribution if one becomes possible (see below), it would impact on any final payment.
Policy redemptions
As has been reported previously, the JL&JORs had completed the sign off processes required for the redemption of the life policies and delivered them to the life companies. At the end of March some 46% of the policy surrenders had been completed. In the intervening period a further 15% of policy surrenders have been completed. This remains a disappointing outcome and is insufficiently complete to allow any immediate consideration of how this may impact a distribution.
The JL&JORs have written to all life comapnies who have yet complete surrenders to obtain explanations for the delays.
Bank repayment
As previously reported 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 JL&JORs can now report that the GBP redemptions are also sufficient to discharge the remaining GBP loan and repayment has been completed.
Other recovery actions
The JL & JORs received the 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 sales (“the Misfeasance Proceedings”). An “inter parties” order (i.e. made on notice to all parties) was granted on 30 April 2015 giving the JL&JORs the authority to continue with the Misfeasance Proceedings on behalf of FPA.
FPA further obtained an order authorising service out of the jurisdiction upon Mr Barkman and Mr Montague and the director within the jurisdiction has also been served. The JL&JORs have been notified that the parties will seek to defend the Misfeasance Proceedings and it is anticipated further Court filings will be made in the Autumn.
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 seek to keep the creditors informed as meaningful information becomes available.
6 August 2015