A legal claim for millions of pounds sought to repay investors has been settled out of court.
Administration managers for the Providence funds were suing its former auditors, PwC, for a sum understood to be some £14m.
The case had been set for a three-week court hearing, scheduled to start on Tuesday, for months.
Instead on that day administrators Teneo wrote to Providence investors with the update, which offers no details on monies available to investors but confirms that some has been received.
‘The terms of the settlement agreement are confidential to the parties, which prevents us from disclosing any details of the settlement,’ said the letter from Teneo, seen by the Guernsey Press.
‘A sum of money has now been received by the joint administration managers’ legal advisers and is in the process of being split.’
The money will be shared between the Providence companies in administration, and a company which funded the litigation action, which will receive its legal costs returned and a share of the overall proceeds.
The Providence companies receive the rest of the cash and liquidation proceedings should start once the administrators are satisfied that there are no other claims which can be made. Once those proceedings are completed, residual funds will be distributed to shareholders on a pro rata basis to their shareholding.
Providence was put into administration in 2016 with no assets and investors have only had the claim against the auditors as a realistic option for recovery of any cash since then.
The legal challenge was launched in December 2018, based on the claim that the auditors failed to detect the funds were merely a Ponzi scheme, an illegal scam which paid profits to early investors with funds from newer investors.
PwC’s attempt to have the case dismissed was rejected in 2020.
Investors in the Guernsey funds lost more than £37m. in total and were advised at the time of liquidation that they were ‘very unlikely’ to get any of their money back.
Teneo thanked investors for their ‘continued patience’ in the letter.
A subsidiary of US firm Providence Group of Companies, Guernsey-based Providence Global promoted two funds that offered investors returns of up to 28% from a Brazilian factoring operation, where company debt was purchased at reduced prices.
The business grew rapidly locally in terms of premises and clients between 2011 and 2016, whereupon it collapsed.
The chief executive of Providence Companies Group, Antonio Buzaneli, admitted orchestrating a $150m. scam that duped thousands, many of them elderly and vulnerable, and including many islanders who were seeking better returns on their savings.
The operation was described by the FBI as a ‘vast and sophisticated fraud scheme [which] truly circled the globe’.