1% asset recovery - Lorreston Bailey $685m in debt, but only $9m available
Published:Sunday | January 30, 2011 | 12:00 AM
Investors of failed securities dealer Lorreston Bailey are likely to recoup just about 1.3 per cent of their investment, according to a Financial Services Commission (FSC) notice disclosing assets of less than $9 million after deduction of expenses.
The company owes about $685 million.
The FSC, which took over the firm last June, says it is hopeful of finding more financial assets.
"We remain optimistic; however, much depends on the results of further investigations," said the FSC in an email to Sunday Business.
At least 71 clients have been identified so far, but the number may be adjusted as additional information is uncovered.
Cease and desist order
On June 30, 2010, the FSC issued a cease and desist order on Lorreston Bailey, while at the same time assuming temporary management of the entity.
The order was based on failure to comply with several regulatory requirements including giving false statement about its financial affairs and contravening directions issued by the commission.
In December 2010, the FSC commenced bankruptcy proceedings against the company and now intends to appoint a receiver/manager to oversee the distribution to investors.
The FSC notice said that only $14.3 million in assets was identified at September 14, from which $3.65 million of expense claims as temporary manager had already been recovered. However, the regulator said it is still owed some $1.767 million.
At the same time it revealed that potential client liability totalled approximately $685 million, for which investors are now being asked to submit claims to the commission.
Adjusting for these expenses, just $8.883 million will be left to cover clients' liability that is 77 times greater.
Asked whether it is likely that additional assets would be identified, the FSC said it remained optimistic.
In the meantime, Lorreston's investors are asked to submit claims to the FSC, along with supporting documents.
Registered since 2005 as a securities dealer in the business of portfolio management, Lorreston Bailey operated from a Seymour Avenue address. The company's sole shareholder is listed as Lorreston Alphonso Bailey, according to Companies Office records.