Investors in the £22m Connaught Income Fund Series 3 have not received distribution payments for the third quarter, after the fund’s “specialist partner” UK Acorn Finance defaulted on the payments.
Connaught Asset Management, which was placed into administration in September, says it has served UK Acorn Finance with a notice of default. Connaught says it is demanding the loan monies are repaid in full within 20 days.
It refuses to disclose the amount of money owed to investors.
Connaught suspended the Series 3 fund in July following a spike in redemptions from investors.
Connaught says investors will receive a letter by 23 November outlining how the suspended fund will be wound down.
Connaught Administration Services chairman Mike Davies says: “The non-payment constitutes an event of default and a notice of default was served on UK Acorn Finance Limited on the 16 October. The notice includes an immediate call in of the loan book assets funded by Series 3 and it gives UK Acorn Finance Ltd 20 days to repay the loan monies in full.”
Yellowtail Financial Planning managing director Dennis Hall says: “A lot of people will now find themselves asking questions about counter party risk that they perhaps should have asked earlier, such as what happen in the case of default.”