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The process of special administration of now-defunct UK Forex broker LQD Markets has encountered a somewhat unexpected hurdle, thus raising the chances that former clients of the company could face further delays in getting their money back.
The initial meeting of clients and creditors, held on April 10, 2015, saw creditors overwhelmingly reject the proposals regarding the future of the broker. Whereas 81% of clients of LQD Markets (by voting power) approved the proposals by the special administrators from Baker Tilly, 91% of the creditors (by voting power) voted against them.
As a result, the special administrators cannot proceed with their plan regarding the dissolution of the broker and the planned disbursement of funds. The latter proposals would have required the approval of the majority of creditors too.
The creditors did not object to the creation of a creditors’ committee, nor to the payment of fees to the administrators. The problems are contained somewhere in the original proposals regarding the planned dissolution of the company and the disbursement of funds. The document provided by Baker Tilly, however, does not specify the particular issue(s) that triggered the reaction by LQD Markets’ creditors.
The original proposals by Baker Tilly include:
Return of client assets;
Engagement of Baker Tilly with authorities;
Rescue the company or wind it up in the best interest of the creditors;
Distribute funds available to creditors in a way considered economic;
The company to exit the special administration by dissolution when the special administrators deem appropriate;
The special administration could be exited via compulsory winding up.
Creditors will have to vote on these proposals again at a meeting to be held on April 20, 2015. They may ask for changes to the proposals, which means that clients will have to approve those again. There is a chance the creditors will reject the proposals for a second time. Then, the administrators will turn to court to advise on how the process will progress.
In both cases, clients of LQD Markets face further waiting for their money. Costs are also increasing, with the legal expenses to be covered from the pool of client monies too.
The insolvency of LQD Markets has brought a raft of challenges to Baker Tilly, including a deficit on client monies that turned out to be twice bigger than projected. The latest estimates show it is around $2.84 million.
To view the proposals by Baker Tilly, click here.
To view the document about the results of the meeting held on April 10, 2015, click here.