Arch Financial Products has called in administrators, following a High Court ruling last month that it was negligent in its management of the failed Arch Cru funds that leaves it facing millions in damages.
Chief executive Robin Farrell and compliance officer Robert Addison have appointed Baker Tilly to oversee the administration process, which will result in voluntary liquidation of the fund manager.
A shareholders’ meeting has been convened for Thursday (15 January) to pass a resolution for the winding up of the company.
Last month a High Court judge found Mr Farrell guilty of dishonesty and his firm of negligence. Judge Walker also refused a stay of execution order, which would have stopped further proceedings until an appeals process is concluded.
Mr Farrell told FTAdviser at the time that he would seek to appeal the verdict through a direct application to the Court of Appeal, after being refused permission to appeal by the judge in the case on the grounds of limited chance of success.
He and his firm were ordered to pay the cells £24.2m in damages and an additional £2.4m to cover their legal costs, £1.4m of which is due this month.
Following the trial conclusion, Hugh Aldous, chairman of the funds’ Guernsey cells SPL, said the “exhaustively detailed judgment” is not only a devastating critique of Arch and Mr Farrell, “but is an exemplary commentary on fiduciary duties”.
The Arch Cru funds were suspended in March 2009 by the Financial Services Authority after pricing and liquidity problems forced them out of trading.
This is the first of many litigation actions launched by SPL as it attempts to recover Arch Cru losses.
peter.walker@ft.com
