Lifemark administrators will this week learn whether a consortium of IFAs or a group of Keydata bondholders has been able to secure funding to bail out the stricken firm.
KPMG Luxembourg, the provisional administrator to Lifemark which is holding the savings of 23,000 UK Keydata bond investors, will find out whether either of the consortiums can deliver on timescale the £12.9m-£19.3m needed to prevent its traded life settlement policy portfolios from collapsing.
The consortium of IFAs led by Norwich & Peterborough Building Society – who advised clients to invest in Keydata products – are keen to avoid liability from any collapse of Lifemark by providing a loan to the group. The Keydata bondholder consortium is keen to ensure Lifemark survives to avoid an asset fire-sale that would render their investments practically worthless.
If the bondholder and IFA consortiums say they can both deliver lifeline loans then KPMG will consider combining them into one consortium.
Meanwhile, an offer by Stewart Ford, who founded both Keydata and Lifemark, to help save the group by handing over more control of his so-called Billericay portfolio of Lifemark bonds was blocked by KPMG last week. It is thought this is because KPMG believes it is inappropriate for Ford, who was a member of the Lifemark board before the company fell into crisis and he resigned, to be involved in the future of the company.
The consortiums are now the last hope for the investors to avoid a liquidation of the Lifemark portfolio that would diminish their £350m of investments.
The Financial Services Compensation Scheme is expected to rule on September 20 that it will not provide help to the investors.
Keydata Lifemark investors would then have no choice but to claim for compensation from the IFAs that advised them to invest in Keydata products, either through lawyers or via the Financial Ombudsman Service.
Norwich & Peterborough’s decision to lead the IFA consortium comes after the group has admitted that its total liability over Keydata would be £50m if the Ombudsman was to rule in favour of all clients it advised to invest in the bonds, if the Lifemark portfolio becomes worthless.
The group is already facing Keydata claims including 250 from law firm Regulatory Legal, and is battling a preliminary ruling by the Ombudsman that it pay an elderly couple £28,000 over its advice to invest in Keydata.