Stewart Ford’s Lifemark bailout plan collapses

The long-term loan offer for the cash-strapped traded life settlement fund has fallen through after the potential loan provider, an affiliate of US group CSG Investments, pulled its offer of funding at the eleventh hour.

The firm pulled out after KPMG Luxembourg, the provisional administrator of Lifemark, published its name in a public statement along with details of the so-called “Seaport Proposal”.

Mr Ford said this disclosure amounted to a breach of the confidentiality agreement between the companies.

He has previously claimed that the deal would ensure the future solvency of the Lifemark portfolio, eventually allowing the Financial Services Compensation Scheme (FSCS) to recoup the cost of compensating Lifemark’s investors in full.

This would allow the scheme to repay the interim levies it charged from advisers and fund managers in January.

Lifemark’s bondholders on November 10 next week will now meet purely to vote on whether to liquidate the firm, not on whether to opt for accepting Mr Ford’s bailout plan instead.

Mr Ford said: “KPMG has frustrated the lender and breached the confidentiality agreement, and that was the final straw. They hadn’t signed the loan application form after 12 weeks and the lender couldn’t do its due diligence.

“Regrettably it has withdrawn its proposal not because it did not want to do a deal but because it has been frustrated in its attempts to arrange it.”

However, he said he was still trying to resurrect the deal. If next week’s meeting of bondholders is adjourned, he added, it may allow enough time for CSG and its affiliate to do its due diligence on the portfolio.

The FSCS is now the biggest Lifemark creditor after taking over investors’ liabilities when it compensated them earlier this year, but Mr Ford’s family trust also remains a creditor.

The collapse of the long-term deal now means that the only funding on the table for Lifemark is a $10m loan being planned from the FSCS itself.

Mr Ford told Investment Adviser last month that if bondholders opted for liquidation then 90 per cent of the potential value of the Lifemark life settlement portfolio could be lost, meaning advisers and fund managers will never be repaid their FSCS levies in full.