Administrator Ernst & Young has confirmed Bates was placed into administration on June 17, along with parent company The Money Portal Limited, after being unable to meet debt obligations.
TMP assets, including Burns Anderson, Sage Financial and Willis Owen, have been sold to Honister Capital while the principal assets of Bates have been sold to HC subsidiary Honister Partners.
The FSCS says it would pay compensation for claims where a firm has been placed in administration and declared in default, although it would attempt to recover some costs if assets are sold.
Burns Anderson, Sage Financial and Willis Owen have been transferred as going concerns, so any claims for these firms would fall on Honister Capital.
Informed Choice joint managing director Martin Bamford says: “This sort of behaviour puts unnecessary and intolerable pressure on those IFAs who do the right thing.”
Towergate Financial Services went into administration recently with its adviser firms bought by Towergate Underwriting. Towergate says it will cover any liabilities arising from TFS.
All Bates’ advisers have transferred to Honister Partners,while IFAs at Burns Anderson, Sage and Willis Owen have transferred to Honister Capital.
The management buyout will see investment vehicle Honister Capital run by former TMP chief executive Mark Lund while non-executive chairman Mark Tennant, chief financial officer Bryan Levine and non-executive directors Mark Holloway and Anton Simon will sit on the board.
Honister, which is backed by Peter Simon, founder and owner of the retail group Monsoon Accessorize, has been structured with no bank debt.
Simon stepped down as a non-executive director in April due to a potential conflict of interest caused by the fact he had expressed interest in TMP.
Lund says: “I am delighted that we have completed this transaction, which will allow our business to move forward on a solid and stable financial footing.”