A STRING of companies linked an island-based investment fund has been wound up in the High Court.
Island-based investors in the Louis Group fear they will never see their money again after the fund, promoted as ‘low risk,’ was suspended, unable to pay its multimillion-pound debts.
In the High Court on Monday, Deemster David Doyle ordered the winding up of Louis Group Structured Fund PLC and five related companies – Louis Group (IOM) Limited, Louis Group Structured Capital Limited, Louis Group International (Europe) Limited, LG SP Investments Ltd and Louis Group SLN Limited.
Deemster Doyle said it was only by the winding up of the companies ‘that the real truth about the affairs of these companies can be established and the position of third parties protected’.
He added: ‘If the insolvent companies continue trading there will be a risk of undue preferences to creditors and other breaches of the law and an unsatisfactory situation remaining without progress to protect the rights and positions of third parties, investors, creditors and the public.’
The deemster also ordered that Mike Simpson and Gordon Wilson of PricewaterhouseCoopers be appointed liquidators and deemed official receivers of all of the companies.
They had been appointed provisional liquidators by the High Court in May last year to investigate the affairs of the structure of linked companies and to trace the whereabouts of sums totalling more than £5 million.
In their report, made public following a court ruling, they said that Louis Group Structured Fund plc, based at Louis Buildings on Buck’s Road, Douglas, ‘probably suffered an almost total loss of investor capital’ due to its exposure to LG SP Investments Ltd, an allied company registered in the British Virgin Islands, which they said appeared to have been engaged in unlicensed deposit-taking.
They said investors were left in the dark about the financial affairs of the company and its various linked entities.
Financial watchdog the Financial Supervision Commission first had concerns in the autumn of 2010 following information received from the company’s board.
The FSC had been urged by liquidators to press for winding up of the Louis Group Structured Fund in the interests of investors and the Manx public.
But the Louis Group had rejected the liquidators’ findings, with director Alan Louis saying the company wasn’t given the opportunity to comment in advance and that they would oppose the winding-up hearing.
At the winding-up hearing, Deemster Doyle said he was unconvinced by the evidence and arguments presented by those opposed to the making of the winding-up orders.
He said: ‘I have been unimpressed by the responses of some of the companies and Dr Louis to the legitimate inquiries of the commission and the inspectors.’
He said he was also unimpressed by the lack of financial records of some of the companies.
‘The evidence does not instil confidence in the past or future conduct and management of the affairs of the companies such that if the companies were allowed to continue without liquidators there would be a considerable risk to the public interest,’ he added.
‘If there was nothing to hide and if they were acting responsibly then Dr Louis and the relevant companies should have fully co-operated and assisted. They did not.’