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Collapsed claims firm misled investors over fundraising

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Failed claims management firm Rebus did not disclose the extent of its financial problems to over a hundred new investors just before it entered administration.

Rebus collapsed in February, shortly after receiving £816,790 through the Crowdcube crowdfunding website. Investors are likely to have lost their cash permanently.

However the Times reports the firm kept the fact restructuring experts had been called in to work on cashflow problems hidden from potential investors.

Administration documents show Resolve was hired to help Rebus find professional investors to help plug a funding gap that threatened its ability to operate.

Rebus’s Crowdcub pitch asked for new cash to “expand the team and hire key staff” in a bid to take advantage of a market it valued at £55bn.

In addition, the company’s online pitch featured Richard Rhys, a former financial adviser banned by the FSA in 2012.

Crowdcube admitted it not know Rebus had hired the restructing firm before it began fundraising. But the site said it would “not have been surprised or alarmed” as “it is normal for business to explore different funding options in their early stages”.

Start-up adviser ECF Solutions founder Rob Murray Brown says: “Rebus was bound to fail before it went on to Crowdcube. The Crowdcube pitch didn’t merely gloss over the cracks in the business, it basically invented a whole new wall to hide them.

“We do need to remove this type of avoidable mistake from crowdfunding platforms for good if we want to flourish.”

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Comments

There are 5 comments at the moment, we would love to hear your opinion too.

  1. Just the first and tip of the Crowd Funding scam. This is the Ebola of financial services.

  2. You’re an expert on Crowd Funding schemes as well are you Harry?

  3. ” A market worth 55bn” If that were the case then who pays for it? This sort of rhetoric encourages greedy consumers, greedy claims companies and greedy investors, all looking to make a fast buck at someone else’s expense. The adverts say ” it is your money, claim it”

    Hardly a sustainable business model, or is it in this day and age of lack of responsibility for ones’ own actions?

  4. If I was a Crowdcube investor/lender I would be very worried about the due diligence they are carrying out given this situation. Even more worryingly they said even if they knew it wouldn’t have changed their opinion. Were they not concerned when Rebus used an ex adviser who had been banned or did they not even bother to check backgrounds of the people they are getting involved with. Given the start-up expert’s comments Crowdcube should be taking a long hard look at themselves as their credibility is shot. Woe betide anyone who invests any significant monies in this type of thing until it becomes properly regulated and due diligence is brought up to acceptable standards.

  5. A collective case against the directors of Rebus has to be considered by those unfortunate victims. I suspect a CMC would take it on on a ‘no win no fee’ basis? Then there are all the partially completed cases – rich pickings for another CMC as well…

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