Merchant Capital owes over £1.5m to its creditors including around £325,000 to HM Revenue & Customs.
At a meeting on 13 February, creditors were given a statement of affairs document prepared by Merchant Capital’s liquidator Shipleys. The document, seen by Money Marketing, shows the collapsed structured products arm of Merchant House Group 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 employee claims totalling a further £55,182, 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.
Among the non-preferential creditors is HMRC, which is owed £324,887, Merchant Capital custodian and administrator Reyker Securities, which is owed £56,232 and director of structured products John Gracey, who is owed £23,694.
Shipleys and Merchant Capital declined to comment.
Aurora Financial Planning chartered financial planner Aj Somal says: “Capital adequacy rules seem to be more onerous for smaller firms, such as advisers, than for larger firms. The regulator should impose tougher capital adequacy rules on larger firms and intervene if there any warning signs that firms are in financial difficulty.”
Separately, Tenet has taken out a debenture against Merchant House Group’s IFA arm Merchant House Financial Services, which continues to trade. The charge relates to a historic business development loan. Tenet declined to confirm the size of the loan or when it dates from.