The administrators of collapsed minibond scheme Asset Life plc have released their latest six monthly report.
Unfortunately there’s been little reportable progress, with the two investments that form the ashes of Asset Life plc, Kyrgyzstani gold hunter Aprelskoe and Armenian metal grubber Lori Iron and Steel, continuing to blank the administrators. The administrators continue to attempt to extract blood from both stones but say they “do not anticipate material realisations in this regard”.
There’s also been no further revelations on how Anglo Wealth plc, an “elegantly packaged scam” which shared two senior personnel in common with Asset Life plc was able to repay the investors in Anglo Wealth, despite having already spent their money: Asset Life plc chairman Martin Binks was an Anglo Wealth director (and ex London Capital and Finance director). Asset Life plc shareholder Terrence Mitchell was also an Anglo Wealth director. Unlike Mitchell, Martin Binks was not party to the criminal case against Anglo Wealth and is not accused of any wrongdoing.
Investigations remain ongoing into the marketing claims made by Asset Life to investors, the supposed insurance arrangements, and where the money went.
The administrators time costs currently stand at £188k, having long blown through the £8,000 that was in the bank on appointment, and remains the only asset to realise any value as things stand.
The adinistrators of Asset Life plc, which collapsed in August 2019 owing £8 million to bond investors, have released their latest update.
Unfortunately there’s not much to report as both of the investments that constitute what is left of Asset Life plc have gone dark on the administrators. Prospects for recoveries from either still look bleak.
We have not identified a realisation strategy for the Company’s investments in Aprelskoe Limited and Lori Iron and Steel Limited that would result in a tangible return to the Company’s debenture holders. Aprelskoe’s two remaining UK-based directors resigned on 5 December 2019 and the company has not responded to any communication from the Joint Administrators. A new Moscow-based director, Mr Sergei Bezborodov, was appointed on 6 July 2020.
[…] Lori has not responded to any communication from the Joint Administrators.
Little is disclosed regarding either the “potential alternative avenues for recovery” being explored by the administrators and their lawyers, or in respect of the insurance policy that supposedly covered Series C bondholders.
In the six months to July 2020, £592 was recovered from a residual balance owed by Keystone Law, plus £7 in interest. Time costs incurred by the administrators over the same period amounted to £21,360.
Its Chairman, Martin Binks, was briefly a director of London Capital and Finance from October 2015 to August 2016. Binks is also a director of Anglo Wealth, a firm described as an “elegantly packaged scam” by a Crown Court judge. Binks has not been accused of any wrongdoing in relation to his work at LCF or Anglo Wealth.
Some of Asset Life investors’ money was funnelled to Anglo Wealth, in return for investments passed from Anglo Wealth to Asset Life plc to settle the resulting debt. The administrators stated in the initial report that they are investigating the relationship between Anglo Wealth and Asset Life, but have not specifically provided an update on this subject in the latest report.
At the time of its collapse Asset Life plc held two investments, a Kyrgyzstani gold exploration company and an Armenian iron ore extraction company. The administrators have not been able to find buyers for either investment and the only realistic prospect of selling the shares is to the other shareholders or connected parties.
The administrators are holding discussions with lawyers as to whether there are any other avenues for recovery but remain schtum on what they might be.
The administrators raise significant concerns about how Asset Life plc was run. The company did not even have its own bank account, instead running investors’ money through “a network of receiving and payment agents”.
There were “numerous movements between connected party bank accounts which do not appear to have an underlying business justification”.
They also continue to investigate the literature on which Asset Life’s bonds were promoted to investors, the “nature of the Company’s assets” and the “destination of the funds raised from debenture holders”.
Insurance
The administrators’ initial report made no mention of the supposed “Lenders Guarantee” that Asset Life plc claimed would protect investors’ capital.
The latest update confirmed that the cover for Series A and B bondholders is in reality worthless. The insurance was with GEF Guarantee Equity Fund Limited, an Israeli subsidiary of GEF Guarantee Equity UK Limited. The UK company had already gone bust in 2015, despite Asset Life plc’s website continuing to advertise the supposed insurance contract with them.
Enquiries continue into the insurance arrangements in place for Series C bondholders. Whether this is the insurance with Klapton Insurance of Anjouan formerly mentioned on Asset Life plc’s website is not clear from the report.
Ineligible investors
According to the administrators, many of Asset Life plc’s investors “clearly do not meet the criteria of investors eligible to participate in these types of investments or to have the schemes promoted to them” – i.e. investors who meet the regulatory definition of sophisticated or high net worth.
UK regulations required Asset Life plc and any introducers to verify that their investors were in reality high-net-worth or sophisticated, if it wished to rely on the relevant exemptions for promoting unregulated investments (COBS 4.12.9 onwards).
The FCA issued a warning in May 2019 – after Asset Life plc had already collapsed in November 2018 – that Asset Life plc might be conducting regulated activities without authorisation. (What those activities might be is unclear – issuing minibonds is absurdly not a regulated activity.)
The FCA has taken no further action over the promotion of Asset Life plc’s bonds to ineligible investors that is publicly known.
The administrators of Asset Life have released their initial report.
Asset Life plc, reviewed here in January 2018, raised £8.9 million from investors in three unregulated minibond issues (A, B and C). At the time of my review they were offering 8.75% per year for a three year term.
When the A and B investors were due to be repaid, Asset Life failed to do so. Asset Life plc asked for 12 months’ grace, which some gave, but others refused. Asset Life was unable to repay those investors who insisted on getting their money back. Interest payments stopped in November 2018.
What regulated activities the FCA thought Asset Life plc might be up to is still unclear (even the administrators say they are still in the dark on this point). Raising funds in unregulated minibonds is not a regulated activity, nor is investing them in random mines in Elbonia.
Nonetheless the warning had the effect of preventing Asset Life plc from taking new money in from its Series C bonds, “leaving it with insufficient working capital to meet its existing obligations” (which glosses over the fact that Asset Life plc hadn’t had enough money to meet its existing obligations since it defaulted on the Series A and B investors and stopped paying interest in November 2018).
Asset Life went into administration three months later in August 2019.
The investment
Investors’ funds were to be used to invest in companies with significant growth potential.
Only two such companies remain: Aprelskoe, which is not a virulent Swedish liqueur but a Kyrgyzstani gold exploration company, and Lori Iron and Steel, an Armenian iron ore extraction company.
According to Asset Life plc’s directors, neither is capable of returning any funds without throwing good money after further investment.
The administrators have been advised that there is no realistic prospect of selling Asset Life plc’s shares in Aprelskoe or Lori except to the companies themselves or a connected party.
The administrators therefore intend to continue holding the investments while they continue discussing with other shareholders.
According to the administrators, all of Asset Life plc’s other investments resulted in total losses.
With wearisome predictability, the Asset Life plc directors blamed Brexit for the company’s collapse.
The directors explained to bondholders that there were various reasons for the delay in repayment of the loans, including poor market conditions as a result of the UK’s current political situation, and the uncertainty of Brexit hampering investment decisions.
How specifically Brexit is to blame for Asset Life plc’s failure is unclear. The fall in Sterling after the 2016 referendum should have made it easier to pay back investors’ money in Sterling using revenue earned overseas in obscure ex-Soviet satellite states, not harder.
Prospects for return
Series C bond investors are being treated as secured creditors while Series A and B bond investors are being treated as unsecured.
A Security Trustee was initially in place for the Series A investors but the Trustee company was dissolved shortly after funds were raised.
The fact that Asset Life plc’s old investors are outranked by their new ones could come as a kick in the teeth, if of course Asset Life plc does actually manage to realise any returns for bondholders at all after paying the administrators’ fees. This would appear to be extremely uncertain.
Director Martin Binks failed to provide a proper Statement of Affairs, instead submitting only previously published accounts and a schedule of bondholders (not a full list of creditors), plus “various items of loose paperwork”.
The administrators have done their best to provide their own schedule, but their list of assets has £8,000 of cash in the bank as the only asset with any known value, with all other assets listed as “nil” or “uncertain”.
What happened to the Lenders Guarantee and insurance?
As late as July 2017, Asset Life plc claimed on its website that funds were guaranteed up to £250,000. In October 2016, this guarantee was supposedly provided by GEF Guarantee Equity Fund Limited.
[Our Fixed Interest Plan] offers an inclusive Lenders Guarantee by GEF Guarantee Equity Fund Limited which protects both the deposit and interest promised to our clients at Asset Life.
GEF Guarantee Equity Fund Limited was a company in Israel owned by a UK company, GEF Guarantee Equity UK Limited. In October 2016, the UK parent had already been in liquidation for half a year.
At some point between then and July 2017, Asset Life plc replaced this with a similar Lenders Guarantee – still with “Capital deposit and interest protected up to £250,000” – this time covered by Klapton Insurance, headquartered in Anjouan, a small island in the Indian Ocean.
However in February 2018 the claim that the insurance guaranteed investors’ capital was removed and replaced by the more vague “an active form of indemnity insurance to cover the Loan”. The insurer was not named except as “underwritten by A rated (AM Best) Rated insurers, either Lloyd’s of London or Company markets”.
Of these various insurance policies there is no mention in the administrators’ report.
Around February 2018, the FCA-regulated company responsible for signing off Asset Life plc’s website switched from Opus Capital to Equity For Growth (Securities) Limited.
Asset Life plc Chairman Martin Binks is well-experienced in the unregulated minibond sector.
Binks was a director of collapsed minibond firm London Capital & Finance from October 2015 to August 2016.
Since May 2014 Martin Binks has been a director of another former minibond firm, Anglo Wealth Limited.
In December 2018 Anglo Wealth Limited was described as an “elegantly packaged scam” by a Southwark Crown Court judge, who sentenced two other Anglo Wealth directors, Terrence Mitchell and Andrew Meikle to suspended prison sentences and disqualification as directors.
According to the administrator’s report, Mitchell remains Asset Life plc’s joint-largest shareholders with a 10% share (banned directors are not banned from being shareholders).
Binks was not part of the criminal case and has not been accused of any wrongdoing in relation to his ongoing role at Anglo Wealth.
Despite the fact that the bulk of the Anglo Wealth funds were “dissipated on supporting the defendants’ lifestyles”, according to lawyers advising the CPS, Anglo Wealth investors were repaid in full.
The connections between Asset Life plc and Anglo Wealth are identified as an “area of specific concern” by the administrators.
We are aware that certain individuals previously involved in managing Asset Life plc were disqualified in acting in the promotion, formation and management of any company following criminal proceedings relating to a predecessor company, Anglo Wealth Limited (AWL). The Company’s audited accounts show that Asset Life plc acquired a number of its holdings from AWL in consideration for writing off an intercompany debt. We are therefore investigating the relationship between AWL and Asset Life plc, and the nature and extent of the intercompany transactions.
So, just to make sure everyone is following along:
Anglo Wealth raised just over £1 million from investors (according to its 2017 accounts, the last filed before it repaid investors).
Anglo Wealth was, according to the judge that sentenced Meikle and Mitchell, an “elegantly packaged scam”.
According to lawyers assisting with the prosecution, “Unusually for a prosecution of this type, the investors were re-paid in full (albeit only after the pair knew they faced criminal investigation)”.
Anglo Wealth managed to find money to repay the investors despite the fact that the investors’ money was already gone, Anglo Wealth having “dissipated the bulk of the funds on supporting the defendants’ lifestyles.”
In part due to the fact that Anglo Wealth managed to repay its investors with other money from sources unknown, Mitchell and Meikle did not see the inside of a prison cell, receiving only suspended sentences plus fines totalling £250,000 (less than a quarter of the amount they scammed from investor).
Asset Life plc, described by the administrators as Anglo Wealth’s successor company, raised a total of £9 million from investors between 2014 and 2019.
Anglo Wealth borrowed money from Asset Life plc (this is the intercompany debt referred to in the administrators report).
This intercompany debt was settled by Anglo Wealth passing holdings to Asset Life plc.
All these holdings received from Anglo Wealth to settle this debt to Asset Life have either gone bust with total losses, are of uncertain value, or were realised before the company defaulted on its investors and entered administration.
The administrators’ investigations continue.
…The lack of accounting records and the involvement of numerous third party payment agents has made the task of reconciling the Company’s financial affairs extremely challenging.
Due to the lack of transparent information on the trading transactions of this Company, we anticipate that these investigations may take some time. In addition, our investigations are likely to require the use of Insolvency Act 1986 powers to compel the provision of information from third parties.
Asset Life plc, which raised £8 million from investors in its bonds, has gone into administration, according to reports. Confirmation of the administration was filed with Companies House on Wednesday.
David Rubin & Partners have been appointed as administrators, who are also currently investigating MJS Capital (aka Colarb).
Asset Life plc claimed to have an insurance policy in place which provided “Security of the Capital”. Exactly what this insurance covers is yet to be made clear, but no investment offering 8.75% per year to the public is fully insured against the risk of loss, and investors would be wise to manage their expectations.
Media spotlight fell on Asset Life plc after the collapse of London Capital & Finance, due to a connection between its directors.
Asset Life plc’s Chairman, Martin Binks, was a director of collapsed minibond firm London Capital & Finance from October 2015 to August 2016.
Since May 2014 Martin Binks has been a director of another former minibond firm, Anglo Wealth Limited. In December 2018 Anglo Wealth Limited was described as an “elegantly packaged scam” by a Southwark Crown Court judge, who sentenced two other Anglo Wealth directors, Terrence Mitchell and Andrew Meikle to suspended prison sentences and disqualification as directors.
Binks has not been accused of any wrongdoing in relation to his ongoing role at Anglo Wealth.
Despite the fact that the bulk of the Anglo Wealth funds were “dissipated on supporting the defendants’ lifestyles”, according to lawyers advising the CPS, Anglo Wealth investors were repaid in full.
With the collapse of Asset Life plc, the question of where the money to repay them came from is more urgent than ever.
We believe this firm has been providing financial services or products in the UK without our authorisation. Find out why to be especially wary of dealing with this unauthorised firm and how to protect yourself from scammers.
Almost all firms and individuals offering, promoting or selling financial services or products in the UK have to be authorised by us.
However, some firms act without our authorisation and some knowingly run investment scams.
This firm is not authorised by us and is targeting people in the UK. Based upon information we hold, we believe it is carrying on regulated activities which require authorisation.
Asset Life plc was incorporated in July 2014 and, according to its July 2015 accounts, issued £1 million of bonds in that year. According to its most recent accounts, for July 2017, it had just under £5.2 million in investor debentures at that time (now almost two years ago).
In November 2015 an investor asked the moneysavingexpert.com forum whether they should invest in Asset Life plc, receiving a universally negative response. In 2017 the thread was deleted following legal complaints by Asset Life plc. A second thread, started shortly after, remains up at time of writing.
Bond Review reviewed Asset Life plc in January 2018. Our review noted that, despite Asset Life plc referring to its bonds as a “deposit”, the use of language such as “The major advantage is that you know upfront what return you will receive over the 3 year period”, and Asset Life plc claiming that its bonds were covered by an insurance company in Anjouan, Asset Life’s bonds were an inherently high-risk investment.
Why the FCA has seen fit to issue a warning into Asset Life plc’s activities, nearly five years after it began issuing investments, is as yet not known. Asset Life’s unregulated bonds are, ludicrously, not subject to FCA regulation.
According to the Times yesterday, the FCA is seeking to have Asset Life’s website shut down. Within the last few days, Asset Life plc’s website has been changed to state that its bonds are closed to new investment. (Google’s cache shows that its bonds were being still being advertised by the website on 12 May 2019.)
Asset Life plc has been overdue with its July 2018 accounts since 31 January 2019. Unusually, Companies House does not display the customary red text to draw attention to overdue accounts at present.
Starting in October 2018, there have been allegations that Asset Life has failed to repay interest and capital on its bonds on time.
Asset Life, London Capital and Finance and Anglo Wealth
Asset Life plc’s Chairman, Martin Binks, was a director of collapsed minibond firm London Capital & Finance from October 2015 to August 2016.
Since May 2014 Martin Binks has been a director of another former minibond firm, Anglo Wealth Limited. In December 2018 Anglo Wealth Limited was described as an “elegantly packaged scam” by a Southwark Crown Court judge, who sentenced two other Anglo Wealth directors, Terrence Mitchell and Andrew Meikle to suspended prison sentences and disqualification as directors.
Binks has not been accused of any wrongdoing in relation to his ongoing role at Anglo Wealth.
According to a firm of barristers who assisted the CPS, Anglo Wealth
accepted very substantial deposits from individuals but failed to make proper investments. Instead, the bulk of the funds were dissipated on supporting the defendants’ lifestyles.
Unusually, investors for a prosecution of this type, the investors were re-paid in full (albeit only after the pair knew they faced criminal investigation).
Where Mitchell, Meikle and Anglo Wealth got the money from to repay investors (having dissipated the bulk of their initial investments on their lifestyles) is not known.
Asset Life plc offers unregulated fixed-interest bonds paying 8.75%pa for a three year term.
Who are Asset Life plc?
There is no information on the website as to who is behind the business.
Companies House shows that the directors are Andrew Farmiloe, Terence Mitchell and Leonard Russell.
According to the annual return the company is owned by a range of shareholders including the above named directors, an ex-director John Woodroffe-Stacey, and three companies who own 9.5% shareholdings each: Dragon Wave Holdings, International Energy Investment and Yum Software SL. The three companies holding shares are presumably offshore – “SL” usually indicates a Spanish limited liability company. None of the directors appear to have a controlling interest (greater than 50%).
How secure is the investment?
Despite Asset Life plc’s statements on its website “The major advantage is that you know upfront what return you will receive over the 3 year period” and references to the product as a “deposit”, these investments are unregulated corporate loans and if Asset Life defaults you risk losing 100% of your money.
Asset Life plc states that the money is used to invest in “startup firms and established businesses with perceived long-term growth potential”. Start-up investment is a high-risk area and your return is dependent on Asset Life plc being able to make sufficient returns from its investments to pay investors 8.75% per annum. If it fails, there is a risk of default.
Asset Life plc states that there is a “Lenders Guarantee” which means that if Asset Life plc defaults, investors will be covered by an insurance policy which will pay up to £250,000. The insurance policy is provided by Klapton Insurance, which is registered in the Autonomous Island of Anjouan, Union of Comoros.
As a Comoran company there is a very little verifiable information available on Klapton Insurance. Asset Life plc states that Klapton has been rated as “An international scale claims paying ability rating of B- (single B-) with a stable outlook” by Global Credit Ratings, who describe themselves as “Africa’s no.1 rating agency”. I have asked Global Credit Ratings to provide us with a copy of the credit report, and they have refused, stating “I believe the Klapton report and rating are private and hence we are not in a position to provide this”.
This gives us very little to go on as to whether Klapton has sufficient resouces to compensate investors should Asset Life plc default on its bonds.
Should I invest with Asset Life plc?
This website does not provide investment recommendations, however investors should consider the following generic principles before proceeding with this investment:
As with any unregulated corporate bond, this investment is only suitable for sophisticated and/or high net worth investors who have a substantial existing portfolio and are prepared to risk 100% loss of their money.
Before placing any reliance on the “Lenders Guarantee”, investors should undertake professional due diligence to confirm that a) Klapton Insurance has sufficient resources to meet all investors’ claims in the event that Asset Life plc defaults, b) that the insurance contract has been properly drafted to ensure that it will pay out as described.
Before investing investors should ask themselves:
How would I feel if the investment defaulted and I lost 100% of my money?
Do I have a sufficiently large portfolio that the loss of 100% of my investment would not damage me financially?
Have I conducted due diligence to ensure the insurance contract with Klapton can be relied on?
If you are looking for a “protected” or “deposit” investment, you should not invest in unregulated products with a risk of 100% capital loss.
