Beaufort Securities Limited (in Administration) & Beaufort Asset Clearing Limited (in Special Administration) – Joint Administrators’
Proposals for achieving the purpose of Administration
1
The following table shows the abbreviations and insolvency terms that may be used in this document:
Abbreviation or definition Meaning
Administration The Administration of Beaufort Securities Limited & the Special
Administration of Beaufort Asset Clearing Services Limited
Administrators/we/us/our Russell Downs, Douglas Nigel Rackham and Dan Yoram Schwarzmann
Barclays Bank Plc – Secured Creditor of BSL
BACSL Beaufort Asset Clearing Services Limited
BSL Beaufort Securities Limited
CASS Client Asset Sourcebook – a set of rules for holding Client Money and
Client Assets set by FCA.
Client Any party for whom BACSL held, or should have held, Client Money or
Client Assets.
Client Assets Client securities which BACSL held (or should have held) at 1 March
2018
Client Claim Portal A new client portal being created by the Administrators.
Client Money Client cash balances held by BACSL at 1 March 2018 or received
thereafter and which are subject to the FCA’s client money rules
Client Money Entitlement The entitlement to receive a distribution from the pre-Administration
Client Money pool
Client Portfolios Refers to both Client Money and Client Assets
Companies or Company Beaufort Securities Limited & Beaufort Asset Clearing Services Limited
Court The courts of England and Wales.
Creditors Secured, Preferential and Unsecured Creditors
CVA Company voluntary arrangement under Part 1 IA86
CVL Creditors’ voluntary liquidation
FCA Financial Conduct Authority
FSCS Financial Services Compensation Scheme, the UK’s statutory investors
compensation scheme for customers of authorised financial services
firms
House Assets The Companies respective general assets excluding those held for clients
HMRC HM Revenue & Customs
IA86 Insolvency Act 1986
IBSAR11 The Investment Bank Special Administration (England and Wales) Rules
2011
IR16 Insolvency (England and Wales) Rules 2016
ISA Regulations The Individual Savings Account Regulations SI 1998 (No. 1870)
Abbreviations and definitions
Beaufort Securities Limited (in Administration) & Beaufort Asset Clearing Limited (in Special Administration) – Joint Administrators’
Proposals for achieving the purpose of Administration
2
NEX NEX Exchange, a Regulated Investment Exchange
Preferential Creditors Primarily employee claims for unpaid wages earned in the four months
before the insolvency up to £800, holiday pay and unpaid pension
contributions in certain circumstances
Prescribed Part The amount set aside for Unsecured Creditors from floating charge funds
in accordance with section 176A IA86 and the Insolvency Act 1986
(Prescribed Part) Order 2003
Proposals This document, being the Administrators’ Proposals for the
Administration of BSL and the Special Administrators’ Proposals for the
Special Administration of BACSL
PwC PricewaterhouseCoopers LLP
the Regulations The Investment Bank Special Administration Regulations 2011
RPS Redundancy Payments Service, part of the Insolvency Service, which is
an executive agency sponsored by the Department of Business,
Innovation and skills, and which authorises and pays the statutory
claims of employees of insolvent companies under the Employment
Rights Act 1996
Sch. B1 IA86 Schedule B1 to the Insolvency Act 1986
Secured Creditor A Creditor with security in respect of their debt, in accordance with
section 248 IA86
SoA Statement of Affairs
SIP Statement of Insolvency Practice. SIPs are issued to insolvency
practitioners under procedures agreed between the insolvency regulatory
authorities. SIPs set out principles and key compliance standards with
which insolvency practitioners are required to comply.
SIP 9 Statement of Insolvency Practice 9: Payments to insolvency office
holders and their associates
Special Administration Special Administration was introduced by law in 2011 to sort out
situations where investment firms which hold Client Money and Client
Assets under the FCA’s CASS rules become insolvent. Special
Administration has different objectives from ordinary Administrations
including returning Client Money and Client Assets as soon as
reasonably practicable.
Special Administrators The Administrators as Special Administrators of BACSL
Unsecured Creditors Creditors who are neither secured nor preferential and do not hold any
Client Money and Client Assets
VAT Value Added Tax
Why we’ve prepared this document
On 1 March 2018, BSL and BACSL respectively went into Administration and Special Administration and that Russell Downs, Douglas Nigel Rackham and Dan Yoram Schwarzmann had been appointed as Administrators of BSL and Special Administrations of BACSL.
As required by legislation, this document and its appendices form our statement of Proposals for achieving the
purpose of the Administrations. We have produced one report covering both BSL and BACSL in order to
minimise costs and for the convenience of any Creditors common to each estate. Accordingly, we discuss
matters in general terms, but make reference to the Companies where relevant and necessary to do so.
This document sets out the following:
a summary of what you could recover;
a brief history of the Companies and why they are in Administration;
what we have done so far and what’s next if our Proposals are approved;
copies of the directors’ Statements of Affairs and our comments thereon;
statutory and other information about the Companies; and
the receipts and payments accounts for the Companies since our appointment.
This document does not contain the Administrators’ distribution plan which was explained in the
Administrators’ letter, dated 12 April 2018. The distribution plan is being developed separately by the
Administrators and, once approved by BACSL’s Creditors’ committee (should one be elected) and the Court,
will be published in due course.
BSL
According to the IA86, the purpose of an Administration is to achieve one of the following objectives:
a) rescuing the company as a going concern, or if that is not possible, or if (b) would achieve a better result
for the Creditors than (a);
b) achieving a better result for the company’s Creditors as a whole than would be likely if the company were
wound up (without first being in Administration), or finally, if that is not possible; or
c) realising the company’s assets to pay a dividend to Secured or Preferential Creditors.
It is not reasonably practical to rescue BSL as a going concern given the cessation of trade, so we are proposing
to continue the Administration with a purpose to achieve objective (b), or failing that, objective (c).
Our job is to manage BSL until Creditors agree our Proposals for achieving the purpose of Administration and
until we’ve implemented our Proposals so far as possible. After that the Administration will end. This process
but may take several years.
As more than 10 Creditors have requested that a physical meeting of Creditors be called, a meeting will be held
on 10 May 2018 concurrent with the BACSL Creditors and Clients’ meeting. A vote of Creditors to approve the
Administrators’ Proposals will be held and, should the Creditors decide, a Creditors committee will be elected to
assist the Administrators. The Administrators support the calling of a physical meeting of Creditors and the
forming of a Creditors’ committee.
BACSL
Regulation 10(1) of the Regulations, provides the Special Administrators with three Special Administration
objectives, namely:
1) Objective 1: to ensure the return of Client Assets as soon as is reasonably practicable;
2) Objective 2: to ensure timely engagement with market infrastructure bodies and the FCA, Bank of
England and HM Treasury where required; and
3) Objective 3: to either –
i. rescue the investment bank as a going concern, or
ii. wind it up in the best interests of Creditors
As required by statute, the Special Administrators commenced work on achieving each of the three objectives
immediately following their appointment. The Special Administrators intend, once these Proposals have been
approved, to pursue Objective 1 as a priority whilst concurrently pursuing Objective 2 and 3 ii. As we do not
consider it possible to rescue BACSL as a going concern (i.e. Objective 3 i.) the Administrators intend to take
appropriate steps to wind up BACSL’s affairs in accordance with Objective 3 ii. above.
Objective 1 also crucially includes assisting the FSCS to enable it to administer the compensation scheme in
relation to eligible Clients which we expect to cover the majority of Clients of BACSL.
Our job is to manage BACSL until its Creditors and Clients agree our Proposals for achieving the objectives and
until we’ve implemented the Proposals so far as possible. After that, the Special Administration will end. This
process may take several years due to specific issues which may arise with Clients.
A meeting of the Creditors and Clients of BACSL will also be held on 10 May 2018. The purpose of this meeting
will be for the Creditors and the Clients to approve the Special Administrators’ Proposals, and to appoint a
Creditors’ committee to assist the Special Administrators. Similarly, the Special Administrators welcome the
appointment of a Creditors’ committee and expect the committees of BSL and BACSL to work closely together.
The whole of this document and its appendices form our statement of Proposals for achieving the purpose of
Administrations.
If you’ve got any questions, please contact one of the below:
Email: [email protected]
UK telephone: 0800 0639283
International telephone: +44 30 7293 0227
Signed…………………………………
Russell Downs
Joint Administrator of Beaufort Securities Limited and joint Special Administrator of Beaufort Asset Clearing
Securities Limited
Russell Downs, Douglas Nigel Rackham, and Dan Yoram Schwarzmann have been appointed as joint Administrators by the High Court to manage the affairs, business and property of Beaufort Securities Limited. Russell Downs, Douglas Nigel Rackham, and Dan Yoram Schwarzmann have also been appointed as joint Special Administrators by the High Court to manage the affairs, business and property of Beaufort Asset Clearing Services Limited.
The Administrators and Special Administrators act as agents of the Companies, without personal liability. All are licensed in the United Kingdom to act as Insolvency Practitioners by the Institute of Chartered Accountants in England and Wales. The Administrators and Special Administrators are bound by the Insolvency Code of Ethics which can be found at:
https://www.gov.uk/government/publications/insolvency-practitioner-code-of-ethics.
The Administrators and Special Administrators are Data Controllers of personal data as defined by the Data Protection Act
1998. Personal data will be kept secure and processed only for matters relating to these appointments.
A summary of what you could recover
This is a brief summary of the possible outcome for Creditors of BSL and Creditors and Clients of BACSL based on what we know so far. It is relatively early in the Administrations and there are still a number of material uncertainties which may cause the current assumptions underpinning the conclusions in this document to change. You shouldn’t use this summary as the main basis of any bad debt provision or debt trading.
Please read the rest of this document and seek further specific advice where needed.
Read the full document HERE (By clicking this link you agree to the terms of the document)
