Investors in Blackmore Bond, the collapsed property investment company marketed by the firm behind bust bond firm London Capital & Finance, may only get a maximum of £5 million back from the £47 million they invested.
That is the grim prognosis from administrators today after they pored over the 11 properties Blackmore holds.
Blackmore, headed by Patrick McCreesh and Phillip Nunn, issued bonds to hundreds of savers, many of whom were pensioners lured in by the prospect of extremely high annual interest of 6-10%.
However, like LCF before it, the company collapsed in April after it stopped seeking new investors and stopped paying interest to existing ones. It had only £906 in in its bank account.
As reported by the Evening Standard last year, most of Blackmore’s property developments are way behind plan and remortgaged to other lenders who have first call on the assets.
Administrators Duff & Phelps said they had recently discovered that, in addition to the £44 million bonds bought by nearly 2000 UK investors who took out almost 3000 bonds, Blackmore had sold a further £2.3 million overseas.
As well as make investments capable of paying back such high interest rates, administrators Duff & Phelps said Blackmore had to pay a 20% fee to marketing firm Surge for all money raised from the public. Surge carried out the same function for LCF, which collapsed last year putting £237 million of pensioners’ money at risk.
Today’s progress report from the administrators reveals for the first time that Blackmore made losses of about £8 million in 2018, following from £7.6 million of losses the previous 18 months.
Blackmore raised money from the public, then lent it to specially-formed companies to carry out property purchases and developments. These so-called Special Purpose Vehicles then took out loans from lenders who were given preferential security over the assets to the bondholders.
The administrators said the interest rates on those loans was high as they were often short term or bridging loans. In several cases, the lenders have put the SPVs into receivership to claim their security.
With lenders now in control of many of the properties, despite the assets currently being valued at nearly £11 million, Blackmore bondholders are likely to get £5 million maximum, before the administrator’s fees, Duff & Phelps warned.
In further grim news for investors, the administrators advised that Blackmore bonds were not covered for compensation by the Financial Services Compensation Scheme. If, however, they bought them through ISA accounts, they should contact their ISA provider for advice. NPI was the ISA firm on one series of bonds.
Administrators are bound by law to investigate issues such as transactions which undervalue assets or defraud investors.
While it was early stages, Duff & Phelps said: “During our preliminary investigations we have identified a significant number of matters relating to the company and the wider group that require investigation.”
These probes could result in recouping funds from other people or companies involved in Blackmore’s operations.
Phillip Nunn is now advertising his services advising people how to boost their social media profiles for marketing purposes. A recent business launch, Blackmore International (Korea) is late launching its documents with Companies House.