Investments  

Axiom directors agree to support Grant Thornton as receiver

The directors of Axiom Legal Financing Fund will support the proposed appointment of Grant Thornton as receiver in acknowledgement of shareholder preference, despite continuing to claim KPMG would be the more appropriate choice.

In a letter to shareholders, dated 15 January, the directors of the fund, which is currently suspended following a high number of redemption requests in the wake of multiple allegations, said that they will support the application to have a receiver appointed for the fund at a February hearing, rather than presenting a petition to wind up two segregated portfolios of the fund.

In order to ensure that a receiver can commence work as soon as possible, the directors have agreed to support the appointment of Grant Thornton as receiver, despite its belief that KPMG would be a more appropriate company to appoint.

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The directors have previously said that, for reasons of cost-efficiency, the receivers should be the two KPMG partners who were appointed in October to conduct an external audit of the fund’s assets following certain allegations in the press.

In the letter to shareholders, which FTAdviser has seen, the directors state that the reasons why it is supporting Grant Thornton’s application is due to several reasons. The directors have been informed that a “significant majority” of shareholders support the view of their clients that KPMG is not the appropriate person to act as receiver and that fact that Grant Thornton are an “internationally recognised firm”.

Furthermore, the directors have requested Grant Thornton not to charge the fund any fees for any work required to be performed by them in respect of familiarising themselves with the factual background to the fund’s current position, nor for informing themselves of all actions taken by KPMG which Grant Thornton has agreed to, the letter said.

Grant Thornton has also provided indicative fees for the receiver appointment that are generally 20 per cent lower than those provided by KPMG, the directors wrote. However, the directors admit that KPMG has not been asked to provide a discounted fee quote in response to this.

The directors said it fully expects that KPMG and Grant Thornton will work closely together to ensure a smooth and efficient transfer.

Last month a petition to the Grand Court of the Cayman Islands by the fund directors said that for a variety of reasons, the fund portfolios - which consist of a master portfolio and an underlying portfolio from which loans are issued to panel law firms to conduct cases - “are or are likely to become insolvent” and that “a receiver should be appointed over the assets of the portfolio and the master portfolio”.