InvestmentsOct 21 2013

Arch Cru investments at centre of fresh £74m claim

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An umbrella company representing the Greek shipping firms that formed a key part of the Arch Cru investment portfolio has filed a claim for more than £74m against a range of parties, including former authorised director Capita.

The company, which represents 14 shipping firms and individuals, has filed a claim in the Greek courts against among others the former authorised corporate director of the Arch Cru funds, Capita Financial Managers and its chief executive Chris Addenbrooke, as well as parent company Capita Group and its chief executive Paul Pindar.

Also named in the claim are Hugh Aldous, chairman of SPL, the company that now operates the former Arch Cru Guernsey cells, the fund manager of the cells Spearpoint Ltd, which is now owned by Brookes Macdonald, and SPL Treasury, formerly Arch Treasury IC Ltd.

Nautical Ventures was founded by Nicholas Koros and is the umbrella company for the special purpose vehicles that each own one of the seven underlying ships that formed the Arch Cru shipping portfolio.

The claim alleges that Capita Fund Managers breached its contractual obligations, in particular by not communicating its plans to “liquidate the assets of these companies” through “forced sales”. The claim states that the seven “almost new ships” were sold for $275,000 (£172,000).

Nautical Ventures is seeking a collective €87.1m (£74m) plus legal expenses.

According to Spearpoint, the action is “essentially a counter-claim” to a lawsuit launched by a number of the named defendants against Nautical Ventures in 2012 over monies allegedly owed to Arch Cru investors, which is ongoing.

The action was filed in Greece in February and a preliminary hearing was due to take place this week, though people close to the situation close to the situation have confirmed that this has been pushed back to early 2014.

Defences have been filed by SPL Treasury, Mr Aldous and Spearpoint. The three parties vigorously deny all allegations and state that the legal process is “flawed”.

It is understood that Capita Group, Capita Financial, Paul Pindar and Chris Addenbrooke have been granted an extension of time and have yet to file defences. The firm did not respond to requests for comment; Mr Pindar and Mr Addenbroke could not be reached for comment at the time of writing.

The claim says that SPL “seized” the seven ships between 2010 and 2011, despite three companies managing the ships, Marine Technology, Nortech and Salamis Shipyards, being in the process of completing refits and conversions for which they had been advanced a $93.3m (£58m) loan by Arch Treasury in February 2010.

The loan was the last in a series of financing and refinancing agreements that had been signed since 2007 and followed a consolidated $200m financing loan that was issued in April 2008, for which a revised payment plan had been agreed in July 2009, four months after the Arch Cru funds were suspended.

Nautical Ventures claims the February 2010 loan was seen as a “sign of goodwill” as it was based on a business plan that was to run until 2026.

In March 2009, Capita suspended the Arch Cru funds following a Financial Services Authority Arrow visit, “which had the effect to suspend all financial activity in relation to Nautical Ventures”, the claim says.

It alleges that as Capita had admitted there was a liquidity problem with the funds it managed and therefore could not undertake the financing of the investment projects, it was in breach of the 2008 refinancing loan agreement.

Gillian Cardy, managing director of trade body IFA Centre, has been spearheading action against Capita Financial Managers, Arch Cru’s authorised corporate director, over alleged failures in relation to the demise of Arch Cru.

That separate legal action is being pursued by lawyers Harcus Sinclair against Capita Financial Managers on behalf of investors in the fund, who are seeking compensation in respect of losses allegedly arising from the suspension and other steps taken in the management of the funds.

Last year the regulator issued a public censure against Capita Financial Managers for its conduct in relation to the CF Arch Cru funds, but the group was not fined due to capital limitations.

Capita has maintained throughout that it is not ultimately responsible for the failure of the funds after it stepped in to suspend them in March 2009. It has also provided more than £30m as part of a £54m redress package, which investors have until December of this year to accept.

A spokesperson for Spearpoint said: “Spearpoint was appointed by the Guernsey Cell companies in December 2009 to take over from Arch Cru in the management of the remaining assets. Spearpoint has no connection with Arch Cru itself and has nothing to do with the UK Oeics.

“As part of this process, which is still ongoing, the Guernsey Cells are taking legal action [in relation to Nautical Ventures]. Mr. Koros’ action is essentially a counterclaim in response to legal proceedings taken against him to enforce a UK judgment for $86m. His action is being vigorously defended and no further comment is warranted whilst these proceedings are pending.”