The administrators of Krono Partners have filed their latest update, a month after the first anniversary of Krono’s administration.
Krono Partners launched in 2013 and offered unregulated seven-year bonds paying interest of 8% per year, supposedly from investing in distressed real estate in the United States and Europe. It then offered another series of bonds which would supposedly be used to invest in SME bridging loans.
The company went into administration in March 2018, supposedly as a result of bank accounts operated by Jade State Wealth being frozen.
This, it has since become clear, was only the tip of Krono’s problems. Krono holds neither distressed real estate nor bridging loans. Instead over three quarters of its assets (according to the Statement of Affairs) consist of an investment registered in the Cayman Islands known as “Company X” which raises corporate finance via Exchange Traded Notes.
Throughout the period of administration, none of Krono’s investments have paid any returns which could have been used to pay investors’ returns of 8-10% per year, even if it hadn’t gone into administration.
Company X is now Company Y
Hopes of investors getting any of their money back rest largely on Company X paying commission from its fundraising to Krono, in return for the money Krono invested in it. When Smith & Williamson were appointed as administrators, Krono management claimed that investors could expect repayment in full.
The administrators have now revealed that Company X can’t actually pay any commission to Krono because of regulations in the Cayman Islands. Whoops.
Thankfully, a way around this has been found which involves a new Company Y being set up in Hong Kong, and has seemingly replaced Company X.
No commissions have yet been received from Company Y either. The administrators list five “key projects” being undertaken by Company Y which are at various stages of fundraising; none have yet reached the stage where they pay Krono (and in due course their investors) any money.
Other than cash in the bank, Krono’s other assets consist of relatively small amounts in shares and micro loans, which are also yet to return anything. A “Company B” in which Krono owns 4 million shares is due to list on the Canadian Stock Exchange by 31 December 2019.
The biggest payment the administrators have received so far is in question. £85,000 was received under “other debtors” which were “relating to the sale of an equity interest”. Subsequently the administrators were paid another £16,649. The unnamed payer is now claiming that only the £16,649 was due and the £85,000 should not have been paid.
The £85,000 / £101,000 is by far the biggest realisation made to date (the only other being £42k in a trading account and cash in the bank) so it will be a blow if it turns out that most of it has to be handed back. Total receipts in the administration to date currently stand at £143k, while the administrators’ costs so far stand at £154k.
The Financial Conduct Authority reviewed Krono Partners in 2014, shortly after launch. After four months it closed its case and took no further action.
Krono is one of a number of failed unregulated investments currently in administration with Smith & Williamson, alongside London Capital & Finance and Park First.