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Merchant Capital owes creditors over £1.5m

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Merchant Capital, the collapsed structured products arm of Merchant House Group, owes over £1.5m to its creditors including around £325,000 to HM Revenue & Customs.

At a creditors meeting last week, creditors were given a statement of affairs document prepared by Merchant Capital’s liquidator Shipleys. The document, seen by Money Marketing, shows Merchant Capital owes a total of £1,537,923 to 74 creditors.

Shipleys estimates the total assets available for preferential creditors is £492,384, leaving a deficit owed to creditors of £1,045,539.

Shareholders own £641,000 in issued and paid up capital, bringing the total deficit owed by Merchant Capital to £1,686,539.

Claims for employee arrears, holiday pay and redundancy payments totalling £20,512 will be paid first as part of the liquidation process. But claims totalling a further £55,182, also owed to employees, and an additional £48,623 in redundancy payments are being treated as unsecured non-preferential claims, meaning some or all of this money may not be paid.

Money Marketing understands a number of staff may not have been paid since 30 October.

HMRC, also a non-preferential creditor, is owed £324,887, made up of £210,442 for unpaid PAYE and national insurance contributions, £61,265 in unpaid corporation tax and £53,180 in VAT.

Among the creditors is Merchant Capital custodian and administrator Reyker Securities, which is owed £56,232. Director of structured products John Gracey is also listed as a creditor and owed £23,694.

Shipleys and Merchant Capital were unavailable for comment.

Merchant House Group, and its IFA arm Merchant House Financial Services, continue to trade.

Separately, Tenet has taken out a debenture against Merchant House Group’s IFA arm Merchant House Financial Services, which continues to trade. Outgoing Tenet distribution and development director Keith Richards says the charge relates to a historic business development loan, and that given the issues at the parent company it made sense to formalise the loan. Merchant House Group cancelled trading on the Alternative Investment Market in November after the company failed to raise sufficient funding.

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Comments

There are 6 comments at the moment, we would love to hear your opinion too.

  1. Whats betting the adviser community gets stung for this by the FSCS?

    Answers on a post card to Santa please and ask him for money.

  2. Not to worry IFA’s as usual will pick up the FSCS bill. Also means one less firm paying regulator fees… Not to worry, IFA’s can pick that up too

  3. If there are capital adequacy rules how can this situation arise – doesnt it prove that they are a pointless thing?

  4. I can tell you how capital adequacy rules do not work, firstly I was in industry for 25yrs and although I had to do a capital adequacy report every year at no time did the FSA check it or ask for proof. also for large firms they are working on last reported tax returns these could be over 12 months old this is a total waste of time

  5. Like Sean I am really confused how come my little firm has more capital adequacy than merchant whose liabilities appear to exceed assets and may have done for sometime without the FSA taking action?

  6. Just look at the issues around Merchant Capital and Merchant House Group. The question is why have there been no police investigations into this shambles?

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