Investments  

Mini-bond scheme collapses owing £45m to investors

Mini-bond scheme collapses owing £45m to investors

A mini-bond scheme which invested in property developments has collapsed into administration owing £45m to bondholders. 

Blackmore Bond issued mini-bonds to investors with a minimum of £5,000 to invest, but according to administrators the company had been in rocky waters for several months.

Yesterday (April 22) Geoff Bouchier and Benjamin Wiles of Duff & Phelps were appointed as joint administrators of Blackmore, which was founded in Manchester in 2016.

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Administrators said funds raised by Blackmore were invested in a portfolio of property developments, with £45m worth of outstanding bonds now owed to investors. 

According to Duff & Phelps bondholders had not received their contractual quarterly payments since October last year despite assurances from Blackmore directors that cashflow issues would be resolved. 

Geoff Bouchier, joint administrator, said there had been concern regarding the company’s affairs for several months.

Mr Bouchier added: "So it will be a relief for bondholders that independent professionals have now been appointed to the company.

"We are immediately undertaking a review of the properties and will immediately commence an investigation into the company
financial position."

A line on Blackmore's website reads: "We have had enormous success with our capital raises to date, allowing investors to be part of this exciting journey."

A bondholder recently issued a winding up petition against Blackmore, which led to the company's security trustee taking steps to appoint administrators amid "increasing concern" for the interests of investors. 

It follows the collapse of mini-bond provider London Capital & Finance, which fell into administration in January last year and has been embroiled in scandal since. 

London Capital & Finance had raised in excess of £237m from more than 11,500 investors over the course of two years. 

Minibonds are not regulated and as such typically don't qualify for protection from the Financial Services Compensation Scheme.

But in January the scheme announced it would compensate 159 investors who transferred their savings from external stocks and shares Isa accounts into LCF accounts - a regulated activity. 

rachel.mortimer@ft.com

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