Arch Cru fund manager streamlines legal claims
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SPL Guernsey, the manager of the portfolios that made up the Arch Cru Guernsey cells, has obtained an order from the High Court directing the parties to focus on issues in just one of the eight matters raised in its legal claims against the former manager of the funds, FTAdviser can reveal.
Following SPL’s application the court has ordered the litigants to prioritise the issues surrounding joint property venture Lonscale Ltd in its £150m action against Arch Financial Products and the related £26.1m litigation action against Arch chief executive Robin Farrell.
In court papers that FTAdviser has seen, the court has approved the request to try the “Lonscale issues” together in advance of the other seven issues in the Arch claim.
Mr Farrell told FTAdviser he believes that SPL is trying to “fast-track” the cases as the court papers suggest that the trial could now take place at the end of 2013.
According to one legal expert, issuing directions such as this is an approach used in cases where there are a number of claims that relate to similar alleged matters and circumstances.
Robert Morfee, partner of Bristol-based law firm Clarke Wilmott, told FTAdviser that this is often done and said: “It makes sense to do this when you look at it from the court’s perspective.”
Hugh Aldous, chairman of SPL Guernsey, declined to comment.
The court will now focus in the first instance on claims that Arch made £3m of “secret profits” after it arranged for six of the cells to invest a total of £26m into property company Lonscale Ltd after being introduced by Lee Barkman, director of Foundations Capital Ltd.
The funds were used in part to finance the acquisition of Club Easy Group, which owned and operated student accommodation.
SPL Guernsey alleges that Arch made “secret profits” of £3m and arranged for Foundations Capital to receive £3m, of which a further £600,000 was returned to Arch, according to the claim lodged in the High Court.
Arch and Mr Farrell deny all allegations. In defence filings it is stated that Arch received £3m in respect of fees for acting in relation to the transaction, but that these fees were in the original contract and were permitted.
Mr Farrell said: “SPL’s pursuit of legal claims has been overzealous. In reality, they are spending millions fighting the case despite not getting anything back. It’s a way to save costs all round.”
Mr Barkman and Foundations Capital are not defendants in either action and are not accused of any wrongdoing.