On 1 April 2020, the directors of B&G plc and B&G Finance decided to place the firms into administration. Paul Boyle, David Clements and Anthony Murphy, insolvency practitioners of Harrisons Business Recovery and Insolvency were appointed as administrators for both B&G Companies.
B&G plc, which is not regulated by the FCA, issued bonds which were sold to retail consumers. B&G Finance, which is regulated by the FCA, acted as an intermediary between B&G plc and investors, arranging investments in the bonds sold by B&G plc.
The FCA believes that there are approximately 1800 customers who have invested in B&G plc bonds, totalling approximately £36m.
Why did the Directors of the B&G Companies take this action?
A significant proportion of the funds B&G plc raised by issuing its bonds was invested in the high cost short term credit lender, Uncle Buck Finance LLP (Uncle Buck), which entered into administration on 27 March 2020. For further details see our news story here[1].
B&G plc and B&G Finance took independent solvency advice after the FCA raised concerns about the viability of the B&G mini bond scheme because the money raised from the mini bonds was almost entirely invested in Uncle Buck. In light of this advice, and following the entry into administration by Uncle Buck, the directors concluded that both of the firms were insolvent and took the necessary steps to place the firms into administration.
Administrators’ details
Address: The Administrators, Basset & Gold plc and B & G Finance Limited (in administration) c/o Harrisons Business Recovery and Insolvency (London) Limited, 20 Midtown, 20 Procter Street, London, WC1V 6NX
Website: www.harrisons.uk.com/bassetgold[2]
Email: [email protected]
Telephone: 020 7317 9160
I’m a B&G bond holder, will I get my money back?
The administrators have assessed the firm’s assets and have forward proposals as to how they will proceed with the administration. The administrators have written to creditors in respect of their proposals including the process for making a claim and those proposals have now been approved. Further updates on the progress of the administration are available here[2].
Will the FSCS pay compensation on B&G mini bonds?
The FSCS has determined that B&G Finance may have mis-sold B&G bonds from 1 March 2018 and is now accepting claims. It is also aware that other authorised firms were responsible for information that was provided to customers who could have been mis-sold B&G mini-bonds between 31 October 2016 and 1 March 2018. Where this is the case, the FSCS will be able to consider a claim against B&G Finance if a customer ‘rolled-over’, or reinvested, their investment through B&G Finance from 1 March 2018. Bondholders can find further information relating to ‘roll-overs’ on the FSCS website[3].
Given the complexities of matters relating to the arranging and selling of B&G bonds over time, the FSCS has determined that it will need to assess each case on its own merit. This means in order for the FSCS to pay compensation, there has to be evidence that mis-selling occurred. Bondholders should therefore submit any available evidence and complete any forms as required by the FSCS.
The FSCS is operationally independent of the FCA and it is the FSCS that determines whether compensation is payable under the FCA’s compensation rules. Bondholders can find further information on the FSCS website[4].
Was B&G plc or B&G Finance FCA authorised?
B&G plc was not FCA authorised. This is because issuing mini bonds is not normally a regulated activity.
B&G Finance is FCA authorised. This is because B&G Finance acted as an intermediary between B&G plc and investors, arranging investments in the bonds sold by B&G plc. Because it is FCA authorised, B&G Finance was also able to approve and communicate financial promotions relating to B&G plc’s mini bonds.
Were there historic issues at B&G?
We had concerns around the accuracy and fairness of B&G plc’s financial promotions of the mini bonds.
As a result, B&G Finance made improvements to its advertising in December 2018 and wrote to all bond holders in January 2019 clarifying that B&G has used ‘the vast majority of Bond proceeds to finance a large facility agreement with an FCA-regulated short-term consumer lender’.
No further bonds were issued to retail investors from May 2019.
I have invested in an IFISA, is it valid?
We recommend investors contact HM Revenue & Customs by e-mail at [email protected] with questions relating to the ISA rules.
Do I need to use a third party to get my money back?
If you are approached by a company, including a claims management company, offering to help you recover your money, you should proceed with caution.
For the vast majority of B&G plc’s bond holders, there will be little or no benefit in involving any third party in making a claim.
For example, if you use a CMC to assist in the return of your assets, the CMC is likely to seek a fee which may reduce what you get back.
If you are considering using a CMC, or other third party, to assist with the return of your assets, we suggest that before you decide to proceed with this route you first discuss this with the administrators using the contact details provided on their website. The FSCS has also produced some points to consider before using a CMC which can be found on its website[5].
Being Alert to Scams
All customers should remain alert to the possibility of fraud. If you are cold called by someone claiming to be from B&G plc, B&G Finance or the administrators, please end the call and call them back using the number above.
FCA Role in the administrations
B&G Finance is still authorised by the FCA and remains subject to supervisory oversight and the FCA’s rules. The administrators are officers of the Court and need to comply with all insolvency law. The individuals appointed are also licensed insolvency practitioners and supervised by the Institute of Chartered Accountants in England & Wales (ICAEW). We are liaising closely with the administrators.
What is a mini-bond?
There is no legal definition of a ‘mini-bond’, but the term usually refers to illiquid debt securities marketed to retail investors.
A mini-bond is essentially an IOU issued by a company (the issuer) to an investor, in exchange for a fixed rate of interest over a set investment term. At the end of the term the investors’ capital is due to be repaid.
The return on investors’ money entirely depends on the success and proper running of the issuer’s business. If the business fails, investors may get nothing back.
Mini-bonds can be attractive to investors because of the interest rates on offer. However, prospective investors need to understand the associated risks. Mini-bonds are usually illiquid as they are not readily transferable, unlike listed retail bonds, which they are often compared to.
Please see the FCA’s mini-bond factsheet[6] for further information and also our page on high risk investments[7].