Blackmore Bonds – the important questions answered

Blackmore logo 2019

Troubled minibond provider Blackmore hit the news again over the Christmas period after missing a third consecutive interest payment and falling overdue with its annual accounts.

Rather than regurgitate the last two articles, we’ll examine the important issues in depth.

Q: Why has Blackmore stopped paying interest?

A: Blackmore has defaulted on three quarterly interest payments, starting in August. August’s was eventually paid a week late; Blackmore blamed a clerical error.

September and December’s payments remain unpaid. Blackmore has now blamed Brexit and delays in selling property.

Q: Why is there so much media interest?

A: An obscure small business (Blackmore raised over £25 million; a £100 million company in the UK is considered micro-cap) being unable to pay its debts on time is normally a “dog bites man” story, as anyone who has lent money or extended credit to a small business knows.

Blackmore however has excited media interest due to unfortunate parallels between itself and London Capital Finance. Both companies paid commissions of c. 20% to Surge Financial. After LCF was shut down by the FCA, Blackmore briefly replaced LCF on comparison sites run by the Surge group of companies.

As discussed in our original December 2017 review, investment in Blackmore was only suitable for high-net-worth and sophisticated investors who could swallow the inherent risks of lending their money, and for whom it made sense to loan a small part of their money to unlisted small businesses. It is clear from Blackmore’s deteriorating Trustpilot rating that a significant number of Blackmore investors were not in fact mentally prepared for the inherent risk of default.

This is not surprising given that Blackmore used the same marketing channels as LCF, which was also promoted to unsophisticated investors.

Q: Where are the accounts?

A: As a PLC, Blackmore should have filed its accounts for December 2018 by June 2019. It has twice used a loophole in the Companies Act to extend the deadline, and now appears to have missed it entirely. Companies House shows the due date as 27 December which was over a week ago.

There are two obvious reasons why it didn’t use the loophole a third time: 1) Blackmore has grown a conscience about using the loophole 2) nobody in the company cares enough anymore to submit the filing necessary to use the loophole.

Q: What does this mean for Blackmore’s attempt to raise money outside the UK?

A: In April 2019 Blackmore briefly closed to new business. When it reopened it had stopped accepting money from within the UK. There remains no legal prohibition on it accepting investment from UK investors (though there are restrictions on how its unregulated bonds can be promoted).

In May Blackmore opened an office in Dubai with plans for further offices in Hong Kong and Tokyo.

The Emirates, Hong Kong and Japan all have one thing in common; they don’t use the Roman alphabet, meaning investors in those countries Googling for Blackmore are less likely to see negative publicity in the UK.

How much investment Blackmore has taken in from outside the UK is unknown, partly due to its failure to submit accounts in a timely fashion.

Q: What is the Financial Conduct Authority doing?

A: Probably nothing. Or nothing visible to the public, which in relation to an investment formerly promoted to the public is as good as the same thing.

Over the last five years the FCA has consistently taken the view that unregulated investments are not its problem (despite its statutory objectives to preserve confidence in the markets and protect consumers). After the departure of Andrew Bailey it is currently rudderless.

Although the FCA intervened in London Capital and Finance over its misleading promotions, which was swiftly followed by the collapse of the scheme, its powers to intervene in Blackmore are more restricted as Blackmore is not an FCA-related company.

At present the FCA appears content to let things run their course.

The consistent failure of the UK to bring its securities laws out of the 1920s, and of the FCA to enforce the requirement for companies relying on “high net worth / sophisticated investor” exemptions to prove that their investors qualify as such, means companies like Blackmore are free to raise money from UK investors without oversight from the FCA or meaningful disclosure requirements.

This is not a scandal as scandals have an element of the unexpected. This is the expected and intended consequence of deliberate regulatory and government policy.

Q: Are Blackmore investors likely to get their money back?

A: Due to the lack of public information on Blackmore’s finances it is impossible to say which will happen from the outside.

Blackmore’s bonds had a minimum term of 3 years and the first capital repayments fall due in 2020.

Small companies can and do recover from temporary cashflow issues. It is also an inherent risk that a loan to a small company results in a 100% loss. The fact that Blackmore’s loans were promoted as “secured loans” does not change that as there is an inherent risk that the security is not enough to cover the administrator’s fees.

Long term, Blackmore needs to generate returns of up to 16% per year after all overheads and costs in order to successfully repay its investors (the return required to sustain 20% upfront commission and 7.9% per year to the investor over three years). The risk that it fails is inherently extremely high.

Q: What can investors do?

A: If you loan money to a company and they stop paying it back, there are only two options: 1) Write it off, forget about it and treat any return as an unexpected bonus 2) Consult a solicitor and run the high risk of throwing good money after bad. All other options are more stressful and less productive versions of 1) and 2).

Investors who were advised to invest in Blackmore by an FCA-regulated financial advisor or used an FCA-reguated SIPP provider may have recourse to the Financial Ombudsman and Financial Services Compensation Scheme.

If investors are contacted out of the blue by people claiming they want to buy their investment in Blackmore, it is probably a scam.

22 thoughts on “Blackmore Bonds – the important questions answered

  1. Brev

    I am a Blackmore Investor and you have stated incorrect information in your report.

    You have said September and December payments missed. This is incorrect. We were due an interest payment on 31st October which has been delayed until this month. THERE IS NO INTEREST PAYMENT EXPECTED IN DECEMBER. The next interest payment is due end of January. So they are only 1 interest payment in delay and NOT 3 as you wrongly stated!!!

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  2. Trust me Karl, you have lost all your money. Nunn & McCreesh go back as far as 2012 with their participation in scams – they are on record for earning c. £1m providing 200 leads per month for the well known Capita Oak scam.

    This is just the latest incarnation of their dubious activities. Prior to this incarnation they were transferring defined benefit pensions into their opaque offshore unregulated collective – Blackmore Global.

    They owned a company called Aspinal Chase – registered in Gibraltar, operated out of Manchester – that carried out the transfers in association with an unregulated Czech advisory firm – Aktiva Wealth Management, later renamed Square Mile International, leter renamed Michalska Holding and now called Planet Pensions. Aspinal did the paperwork, Aktiva gave the “advice”. Some victims claim they were cold called by Aspinal Chase but this is often denied by Nunn & McCreesh.

    Their objective was to transfer pensions into a QROP – they used Kreston on Isle of Man; Optimus in Malta and GFS in Hong Kong to name just three – then, via a very expensive Life Bond, invested the pension into Blackmore Global.

    The accuracy or otherwise of the post’s statement as to how many interest payments have been missed is somewhat irrelevant and does not alter the final outcome – you’ve lost all your money.

    Blackmore is going the same way as LC&F. It’s just a matter of time before the “house of cards” tumbles. Then, no doubt, they will start another venture.

    It has been speculated by some (but I have no hard evidence) that Blackmore (the Global variety) invested in Dolphin! As for Blackmore Bond – missing payments, missing filing accounts and the silence is deafening – is this typical behaviour of a legit company?

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  3. Brev

    You say that the loans from investors are secured. Is there any evidence of this, has anyone seen evidence of a first charge on land and property on behalf of the investors?

    Many of these funds (cannot comment on this one), having taken funds from the public, obtain additional leverage from other lenders in the hope that this generates greater returns in a bouyant market. Does anyone know if Blackmore have taken out other loans? If so, they will be secured and are they the actual first charge? If so, are they up to date on their interest repayments? If not, it could be a lender that causes the fund to go into administration or liquidation.

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  4. Can you please give me a ring I’m one of them Blackmore bonds investor will you please give me a ring on my mobile thank you

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  5. Karl: Thanks for the correction. With all the delays, deferments and defaults I lost track. I could correct the article but frankly I can’t be bothered. I have a feeling it will be overtaken by events soon anyway.

    Mr Skeptic: No-one outside Blackmore has any idea of the value of investors’ security, especially given their failure to file accounts in a timely fashion. Or whether this may have been diluted.

    This is why any secured loan requires full due diligence conducted independent of the borrower for the security to mean anything.

    Fiz Patel: This is an independent review site and I have no idea what your phone number is.

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  6. It seems to me that someone needs to go to the Land Registry, pay the relevant fee, and have a look at who has title on some of the developments and if there are any mortgages or other charges against the land and property in the event that there are no imminent accounts.

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  7. Or, just wait for the house of cards to collapse and let the Administrators do it …. I speculate it won’t be long before all is revealed …. Given the Chairman and company Secretary jumped ship in December I suspect all is not well with the accounts and it will all come out in the wash and the water will be dirty.

    However I also suspect Tweedledum & Tweedledee have squirreled away milions offshore, so they will not be financially hit – just the investors. The world is asymmetric and biased in favour of scammers as the last decade has clearly shown.

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  8. I am unsure whether Nunn and McCreesh are stovepipe hat-wearing, moustache-twiddling villains who cackle as they leave a damson tied to a railway line (steam train fast approaching) or whether they are stupid, arrogant fools who think they can reap the rewards of their success prior to having achieved any. (Think normal-coloured Donald Trumps with less ability and looser grips on reality).
    Probably it’s a mix of the two.
    That the Blackmore Group accounts have not been filed (over a week late) is insignificant to the complete lack of audited accounts of their Isle of Man fund.
    I wouldn’t be at all surprised if money was flowing between the two entities to patch up the respective boats in times of need.
    I think the coffers of both are now dry and either they are going to have to inject some capital themselves or the whole lot is going to Davy Jones’ locker.
    Like Trump, I don’t think it would bother them to put the various companies in administration, have a nice holiday and start all over again.

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  9. The coffers may be “dry” here but the Blackmore Group have a company called BG Finance Holdings Ltd, registered in the British Virgin Islands ( https://offshoreleaks.icij.org/nodes/12125400 ) (“BGFH”)

    In the Blackmore Global Offer Supplement (the Isle of Man unregulated fund) on page 13, it says it pays BGFH 2.5% of assets under management (“AUM”) per annumas a management fee. In 2016 they claimed their AUM was £17m, making the annual management fee £425,000 p.a. at least.

    The document also allows for a 25% of Net returns to be paid to BGFH as a “performance fee”. I imagine a similar “coffer” exists for the Bond. So they are potentially squirreling away large sums of money to the BVI in management fees.

    Trust me, when saying the coffers are dry, it really depends which coffers you are talking about. I bet their BVI cup runneth over – far from HMRC hands.

    Back in 2017/18, after the Radio 4 You and Yours pprogramme reported on Blackmore Global, the BBC reporter attempted to investigate further the BVI company and its activities but his management pulled him off it because he didn’t find anything tangible to report quick enough.

    Nothing ever came of it and no journalist, either with the BBC or the Newspapers (like the Times, who also show an interest in Blackmore) has managed to find a serious story.

    Real investigative journalism is a dying skill in favour of quick headlines and shallow reporting. Pity. I wonder what turning over that stone would have revealed?

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  10. I’d guess that the charge is 100% of the assets of the SPV to be held by the Trustees (IAG) as per the terms and conditions of the loan note/mini bond.

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  11. Much of the comment on here is valuable. But how can you say: ‘All the information in our articles was correct as at the timestamp at the top of each article. Do let us know in the comments if anything is out of date’, and then in the comments here acknowledge a basic error (an important one too – an allegedly failed income payment by Blackmore) and then not be ‘bothered’ to correct it (your words). This is lazy and undermines the authority of the site.
    FWIW, I wouldn’t touch Blackmore with the proverbial barge pole – but why let basic errors stand uncorrected, even if the product looks dodgy?
    The other issue I have with this site is the anonymity of the editorial. Compare and contrast with the controversial Tom Winnifrith, whose Share Prophets site causes regular uproar and provides a valuable investor service. If I knew who was behind BR and if you behaved like Winnifrith (objectionable – but undoubtedly a real journalist and commentator) I might have given you some dosh when you held out the begging bowl recently. As it stands – a cloak of anonymity and allowing acknowledged errors to stand, you’re in a way bracketing yourselves with the furtive, low-grade crooks you write about.

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  12. This is lazy and undermines the authority of the site.

    If you say so. I just state the facts, if people want to ascribe authority or don’t it’s a free country.

    Errors of material fact will be corrected; whether Blackmore were meant to pay investors in September or October is not material and grows less material with every day they remain unpaid.

    As it stands – a cloak of anonymity and allowing acknowledged errors to stand, you’re in a way bracketing yourselves with the furtive, low-grade crooks you write about.

    Then maybe I should drop the “begging bowl” and offer secure bonds paying 8% per annum.

    Begging is asking for something for nothing. Bond Review is completely free of charge and 100% unpaywalled, unlike Shareprophets (though I have no issue with how they run their business), so if anyone’s getting something for nothing it’s certainly not me. I am in the fortunate position that I don’t need to use a paywall to keep Bond Review on the air at present; if people feel like contributing to the hosting costs then every little helps.

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  13. People seem to forget, if they don’t like the site or the opinions expressed on it, then don’t visit the site.

    It’s not rocket science.

    All I know is the articles here do generally present facts, easily verifiable by readers, and the one fact in this instance in error has a) been pointed out and b) at least acknowledged by Brev and honestly answered as “can’t be bothered”. So what? The eror is known and acknowleged. End of.

    As for Anonymity, the name Damien Frank is just as anonymous as “Brev”. I have no idea who that person is or his credentials. He’s about as “authoritative” as “Brev” in my opinion.

    In this day and age, it’s hard to distinguish “authoritative” articles from “fake news” anyway.

    “Believe nothing you hear, and only one half that you see.”, Edgar Allen Poe 1845, could in today’s world be: “Believe nothing you [read on the internet], and only one half that you see.”

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  14. It appears Blackmore have updated their website of the properties they are developing with your money. One in particular is interesting – St. Augustine’s, Cheadle Heath – https://www.blackmorebonds.co.uk/property-cheadle.html

    The update says that estimated completion is October 2020.

    This was one of the first properties the Group purchased back around April 2017 and was to be converted into 9 apartments. It featured in the local rag: https://www.manchestereveningnews.co.uk/business/business-news/derelict-stockport-church-transformed-apartments-12935667

    Now Blackmore have another site called Blackmore Homes https://blackmorehomes.com/property-developments/st-augustines-cheadle-heath/ and this reported on this property with an estimated completion date early 2018 and claimed 6 of the 9 properties were already sold! Here we are January 2020 and the estimated completion is October 2020 – over two years late and only 3 apartments left needing to be finished?

    There are porky pies being told somewhere because this doesn’t stack up.

    Does anyone think they are a healthy property development company? Over 3 years to convert a church into just 9 apartments when 2 years ago they claimed they had sold 6 of them already! How long to complete their ambitious 64 apartments in Stevenage? 21 years?

    The Blackmore Group Director quoted in the Manchester Evening News is on record as one of the “cold callers” providing leads to the Capita Oak scam as far back as 2012 when he worked for Nunn McCreesh LLP; he was later a “Sales Director” for Aspinal Chase (also owned by Nunn & McCreesh) transferring defined benefit pensions into Nunn & McCreesh’s Blackmore Global fund – their own opaque offshore unregulated collective – in collusion with Aktiva Wealth Management, later called Square Mile Internationa Financial.

    These people are slipperier than a bucket load of snot! You cannot believe anything they say.

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  15. Is the sentence in the letter confirming my investment that I have been registered with the Capital Guarantee Scheme and are now insured for £…. with ION Insurance Group meaningless?

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  16. Blackmore’s “Capital Insurance Scheme” seems to have been rather forgotten about.

    Whether it is meaningless or not depends on exactly what the insurance contract says and whether Blackmore has maintained the premiums. However there are multiple examples of unregulated investments trumpeting some sort of insurance contract with a third party, which when the crunch comes doesn’t pay out for one reason or another. Prior examples include Allansons, MJS Capital, Asset Life, and others I can’t remember off the top of my head.

    As a general rule insurers do not provide credit default swaps for unregulated schemes offering high returns to retail investors. If they wanted to take on the risk they’d just invest in the bonds and get a higher return than the insurance premium. If an adequately-capitalised insurer did take on the full risk of default, then the cost of insurance would bring the offered returns down to the risk-free rate.

    Have you tried ringing ION Insurance Group and asking them what happens if Blackmore go bust?

    Would this be Ion Insurance Group, S.A. of Costa Rica? Their website says they are “Here To Secure Your Ocean Marine Risks” so why they would be underwriting an unregulated property investment in the UK is anyone’s guess.

    When I published my review in December 2017 the “Capital Insurance Scheme” was backed by “Northernlights Surety”. It isn’t clear to me what happened to that. Around the time Blackmore stopped promoting itself in the UK any mention of the Capital Insurance Scheme disappeared from its website.

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  17. I haven’t seen the Insurance Document. Has anyone else been contacted by Oak Fund Services today about Blackmore Bonds? It seems they are the security trustee for BB in respect of 6 series mini-bonds as stated in the Information Memorandum. I never received one of those either. They ar sending documents I have not received, that’s it. Apparently they have no role in ensuring investors get paid!

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  18. In my professional life, I worked in insurance at a senior level.

    I’ve just had a look at Ion’s website & annual report & accounts. Nothing is, ahem, “normal”.

    Don’t hold your breath…………………….

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  19. Aren’t Goji the company who provide Blackmore’s ISA wrapper? So if you hold a Blackmore ISA you’re already invested via Goji. (Unless Blackmore were using another company to funnel ISA monies when you invested.)

    This blog does not provide legal advice. People may be able to give you more guidance if you can give more information about what you’re asking. Agent for what exactly?

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