It has been more than two years since the bankruptcy of FCA regulated retail forex and CFD broker Alpari UK. However, it will be a few more months until some Alpari UK clients get at least some of their money back.
Alpari UK special administrator KPMG has issued a progress report on the return of client funds, which contained some good and some not-so-good news.
The good news, is that all former Alpari UK clients which opted to be compensated via the UK’s Financial Services Compensation Scheme (FSCS) have been paid in full, to a maximum of £50,000 per client.
To date, the FSCS has taken assignment of 12,759 client claims and has paid out compensation of $50.8 million to 12,305 clients – representing just over half of the entire client claim amount.
The not-so-good-news, is that the clients who didn’t go the FSCS route but preferred to be compensated by KPMG directly from the client money pool will have to wait a while longer, most likely until July.
KPMG reported that to date, it has paid out 55 cents on the dollar for those direct claims. However, it is being delayed from making further payments due to one significant client creditor who has appealed KPMG’s part-rejection of his claim. KPMG cannot distribute the remaining client money funds until after the client’s appeal has been heard and judgement has been given. A hearing date of May 9-11, 2017 has been set by the court for the appeal.
By its mandate, KPMG must wind up the client money pool and distribute all client money by July 24, 2017.
So how much will ultimately be distributed to clients?
KPMG estimates that the overall return to clients will be in the range of 78.3 to 79.7 cents on the dollar. While virtually all Alpari UK client money was accounted for, the bankruptcy estate is being charged with fees which will approach $20 million. The largest fee, of course, is being paid to KPMG itself for its bankruptcy administrator services. KPMG has charged £12.6 million worth of work (at a hefty average of £419 per hour worked) to the Alpari UK estate, although it has agreed to cap its fee at £10.5 million.
Clients who had less than £50,000 in their Alpari UK account, and who receive less than 100 cents on the dollar back from the client money pool, can still apply to the FSCS to receive the remainder back as well. However clients with larger accounts will not.
The full KPMG status report on the Alpari UK bankruptcy can be seen here (pdf).