A group of investors in troubled life settlement vehicle ARM Asset Backed Securities wants to be able to scrutinise each proposal from prospective buyers of the fund to ensure the best offer is put to a bondholder vote.
Luxemburg-based ARM issued bonds based on life settlement policies without the appropriate permissions. The bonds were sold via distributors in the UK and Europe. A total of £75m was paid into ARM bonds by UK investors.
ARM was one of the underlying investments which backed Rockingham’s retirement income tri-investment account, or Rita, a 10-year annuity wrapped in a Sipp. Rockingham was fined £35,000 in September for putting clients at risk of unsuitable advice, and went into liquidation last month.
The ARM board is currently tendering for a buyer of the assets and liabilities of ARM, which would then restructure the fund.
Last week the board revealed there were four interested parties in buying ARM, which have been asked to submit full proposals.
The interested bidders include US life settlement firm Insetco, which first announced its intention to acquire ARM assets in September, and UK-based company Life Settlement Consulting. The other two potential bidders have asked not to be named under confidentiality agreements.
One of the interested parties is a specialist fund house and the second is a hedge fund with over $60bn under management.
The ARM Help investors group, led by investor Bob Sharpe, has continued to raise concerns over the lack of transparency in the way the board has carried out the search for a potential buyer.
It has written to the ARM board calling for the details of each proposal to be made available to all ARM investors. Selected offer proposals are due to be put to a bondholder vote in July.
Sharpe says: “The tender document is in our view inadequate to the task of producing fully detailed restructuring proposals.
“We consider the only way in which bondholders can be satisfied as to the fairness of the selection process is for bondholder representative Bob Sharpe together with a suitable member of the ARM Investors Forum to be allowed to examine each and every proposal to satisfy demands that the best offer for bondholders is put forward to the general meeting in July for investors to vote on.”