Tiuta Plc enters administration

Tiuta Plc enters administration




Money has begun to be returned to investors but it could take up to two years to determine the full losses and return the remaining sums to investors..

 

Directors of bridging lender Tiuta Plc have today revealed to B&C that the company has voluntarily entered administration.

 

 

 

 

Tiuta Plc submitted an administration application yesterday afternoon to realise the company’s assets and to ensure investors receive the best return on their capital.

 

 

The estimated loss of Tiuta Plc is likely to be in the tens of millions. 

 

 

Commenting on the news, Steven Nicholas, Director of Tiuta Plc, said: “Following the administration of Tiuta International as the principal lending arm, a decision has been taken with reflection and approval of the FSA to place Tiuta Plc into administration. The process has yet to be completed and this step has been taken to preserve the integrity of the underlying business, the reputation of the Tiuta brand and also the lending platform.”

 

 

Background 

 

 

On 13th April 2012 Connaught Asset Management (CAM) contacted its investors to inform them that the Series 1 Fund was unable to pay the scheduled quarterly interest payment to investors after bridging lender Tiuta, which was backed in part by Series 1 and 2 funds, told the asset manager it would be late paying its own interest payments. 

 

 

The FSA subsequently issued a warning to investors.

 

 

Tiuta Plc became the specialist partner to the CAM Series 1 Income Fund back in 2008 and a Tiuta subsidiary called Tiuta Development Finance secured new funding via Series 2 in October 2010.

 

 

On 7th March 2012 CAM suspended redemptions from its Income Fund Series 1 while it commissioned a review into the true value of the fund. 

 

 

A review flagged the possibility some of the fund’s loans may be under-secured and the fund was subsequently suspended in March. 

 

 

The Series 2 Fund, which raised £18 million, was suspended soon after in June.

 

 

In an announcement to the Channel Islands Stock Exchange in May, the investment manager said the suspension will continue while it awaits the final report of independent accountant BDO LLP, on the recent trading, current financial projections and financial model of Tiuta Plc and its subsidiaries.

 

 

A B&C Exclusive in May revealed that Tiuta and CAM were parting ways. 

 

 

In June a decision was made to wind Funds 1 and 2 down and the loan books were sold to CAM for £1 each. 

 

 

CAM took control of the portion of the loan book held by London-based Tiuta International Limited – a former subsidiary of Tiuta Plc - on 13th June 2012.

 

 

Administrators BDO LLP were appointed to Tiuta International Limited, specialist partner to the CAM Income Series 1 Fund, on 5th July 2012. 

 

 

In addition, Connaught’s Series 3 Fund, not linked to Tiuta, was also suspended and it entered an orderly wind down process due to a spike in redemption requests. 

 

 

Tiuta International was placed into administration by Connaught on 23rd July.

 

 

Duff and Phelps told the meeting it has written to Tiuta calling on it to honour a guarantee to fund any losses on the Series 1 fund. 

During the meeting, Solicitors SJ Berwin said it had no reason to believe the validity of the guarantee should come under question.

Following an emergency meeting on 24th August CAM Series 2 was terminated with immediate effect, with it being wound-up in accordance with the trust instrument. 

Money has begun to be returned to investors but it could take up to two years to determine the full losses and return the remaining sums to investors.

On 12th September, over 92 per cent of investors voted to place Series 1 in liquidation. 

Duff & Phelps were also chosen to replace BDO as the administrator.

Some might think that troubles may have started earlier, as in January 2011 BDO had conducted a review of the Tiuta group’s financial position which identified a liquidity shortfall.

Connaught's liquidators have since agreed an £18.5m settlement with former fund operator Capita.

4 Comments

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    Adrian

    It was a decent effort by Steve's comeback to recover losses made by his predecessors, little bit too late though... Great personality, good leader, but doomed by the property slump!!! Good luck to a decent bloke to relaunch...

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    Tony

    Hard luck Steve! You tried hard. Look forward to seeing you soon when you relaunch. Thanks for the commission and for lending when others said no. Unlike others on here, I prefer to remember the completion cheques, instead of kicking a decent bloke when he is down!

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    madseller

    Shame that the likes of this debacle will tarnish UCIS schemes moving forward. There are some terrible UCIS schemes and some very good ones but as always it will be the decent ones that will suffer becuase of the greed of a few.

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    Paresh Shah

    Tiuta in my mind was always a bit of a suspect company. I had a horrid experience with them for a client, where two wild valuations were given. At the time a so called director said one thing and the valuer another. Alarm bells started ringing five years back. Their admin was appalling to say the least. Good to see these type of companies shut down. Sorry for the people who lose out, employees and borrowers. I am glad to use one reputable company now, which is backed by a larger company with excellent procedures in place to protect everyone.

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