Providence creditors asked to provide proof of debt

They are being invited to submit their claims for losses incurred when their investments were lost as the company collapsed. Clients in the Channel Islands were understood to have lost some £37m.

All the companies have been placed into compulsory liquidation by the Royal Court.

Millions of pounds were invested by people from all over the world into companies operating under the Providence name in a scheme which turned out to be a fraud.

In Guernsey, Providence Investment Funds PCC and Providence Investment Management International have been placed into liquidation under Teneo Financial Advisory.

Andrew Wood and Ian Wormleighton, of Teneo, were appointed joint liquidators by the Royal Court.

There is now an opportunity for creditors to make claims by providing proof of debt forms by 21 April.

The fraud was discovered in 2016 and the network of companies collapsed rapidly. The Guernsey office had become a significant employer.

As administrator, Teneo tried to sue the funds’ auditors, PwC, for a sum believed to be around £14m. A settlement was reached shortly before the trial was due to begin in the Royal Court almost a year ago, and it is some of this money which is believed will be available to settle the claims of local investors.

When the collapse of the group first appeared before the Royal Court in September 2016, Judge Russell Finch famously described the case as a ‘reeking pile of guano’.

The fraud perpetrated by companies operating under the Providence name raised money from investors all over the world by claiming that it would invest the funds in Brazilian factoring – a financial transaction in which accounts receivable are purchased at a discount.

Providence claimed it was buying the debt and realising a profit when post-dated cheques cleared, and it claimed interest rates on investments of between 12 and 24%. Early local investors got some proceeds but then the interest payments dried up.

A significant amount of the investors’ funds were used to make Ponzi-style payments to other investors and to make commission payments to Providence’s nationwide network of brokers.

Providence affiliate offices were opened in Guernsey and Hong Kong in 2011 and 2012 and through these $85m. was raised from offshore investors who were told the same lies that the fraudsters had told investors in the United States – that their money would be used to invest in Brazilian factoring.

Providence investors worldwide, including more than 500 victims in the United States alone, lost a total of more than $100m.