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Arch Cru fund freeze hits administrator’s efforts

Administrators fighting to liquidate Arch Cru’s assets are angry after the Channel Islands Stock Exchange suspended trading in 11 sub-funds of the failed group only to lift the suspension days later.

The CISX froze trading on the closed-ended funds on Tuesday last week and then lifted the suspensions on Monday this week following frantic talks with involved parties.

The suspensions hampered attempts to liquidate the sub-funds and return capital to Arch Cru investors by selling off their assets to various investors.

A source close to the process says: “They must have realised how daft the decision to suspend the funds was and if they did not realise how daft the decision was then there is something seriously wrong. This has created enormous confusion among investors – it was a typical knee-jerk reaction.”

Investment managers Spearpoint and Arch Cru’s new board, who were brought in to oversee the liquidation, were on the brink of tendering the assets of five of the 11 funds before the suspension. It was hoped this would see as much as £18m returned to Arch Cru investors.

The £363m fund range was suspended by Capita in March 2009 due to liquidity concerns caused by redemption requests. The value of the fund range dropped by £140m between March 13, 2009, when it was suspended, and September 30, 2009. The range invested in questionable assets including ships, property and private equity via a series of sub-funds listed on the CISX.

The suspension followed Ernst & Young issuing a report and accounts for the year to March 30, 2010 for the sub-funds on September 30.

The accounts show E&Y was confident of its valuation of the assets as at March 30, 2010 but it qualified that it could not be confident of previous work carried out for year to March 30 2009. This triggered the alarm at the CISX which suspended the funds, despite talks with the Arch Cru board which insisted the 2009 accounts are no longer relevant.


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