Local Providence investors awaiting their day in court
ISLAND residents who lost money in the collapse of Guernsey-based Providence companies look set to be the only people in the world to receive any of it back, according to the liquidators.
Seven years ago today Providence Investment Management International and Providence Investment Funds PCC were placed into administration by the Guernsey Royal Court.
Teneo Financial Advisory were appointed administrators and later became liquidators of the two companies – Providence Investment Management International and Providence Investment Funds PCC.
Teneo invited creditors to submit claims for losses in April.
Channel Islands clients were thought to have lost about £37m. as a result of the Providence companies’ collapse.
This followed the discovery of a fraud perpetrated by companies operating under the Providence name.
They had raised money from clients all over the world by claiming that the funds would be invested 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, claiming interest rates on investments of between 12% and 24%.
Hundreds of Guernsey-based investors lost their life savings.
Three investors contacted the Guernsey Press as the anniversary of the liquidation date loomed, frustrated at the lack of progress: ‘We are all getting older and it is so unfair,’ said one ‘very unhappy investor’. ‘They [the liquidators] are making £500-plus an hour for their work but we see nothing.’
A spokesman for the joint liquidators said that it became clear within a few months of administration managers by the GFSC in 2016 that the true recoverable value of assets and investments in the Providence group of companies was likely to be nil.
‘Despite the lack of any material funding within the companies or from investors, the administration managers rapidly identified a claim, secured third-party funding to pursue that claim, and ultimately settled that claim on favourable but confidential terms,’ he said.
Now, as liquidators, they are finalising the legal steps ‘to enable distributions to be made to creditors and investors’.
‘Despite initial expectations for no recoveries for investors, the liquidators look forward to being able to make distributions shortly, noting that the Guernsey processes will represent the only material recoveries made in any of the insolvencies of Providence-branded companies globally.’
n Providence investors worldwide, including more than 500 victims in the United States alone, lost more than $100m.
