Blackmore Bond collapses leaving thousands in fear for their savings

Blackmore Bond, the property investor which raised £45 million from investors through mini-bonds through the same marketing machine as collapsed London Capital & Finance, today collapsed into administration.

The company, whose precarious financial position was first exposed by the Evening Standard last year, was founded in 2016, offering high interest rates with a minimum investment of £5000.

However, construction work appears to have been slow, leading to a cash crunch as sales and completions failed to materialise on time. Bondholders have not had their promised quarterly coupon payments since last October.

Today it emerged that Duff & Phelps had been appointed joint administrators.

They are the same firm of administrators that was hired after the collapse of another high risk property scheme, Carlauren Group.

Duff and Phelps pointed out that the repeated failures to pay dividends had been "despite assurances from the directors throughout 2020 that the situation would be resolved."

The process of appointing administrators has been a complex one due to the numerous special purpose vehicle companies Blackmore used to buy its properties.Many of the developments have been mortgaged to other lenders, making it even less clear how much money will be left for bondholders.

One bondholder representative issued administration proceedings, then their security trustee stepped in to appoint Duff & Phelps.

Administrator Geoff Bouchier said: "There has been ongoing concern regarding the company's affairs for several months so it will be a relief for bondholders that independent professionals have now been appointed to the company.

"We are immediately undertaking a review of the properties and will immediately commence an investigation into the company financial position.

Blackmore Bond was launched in 2016 by Patrick McCreesh and Phillip Nunn and were marketed and distributed by Brighton-based Surge Group, described as its marketing and back office partner. Surge, founded by controversial entrepreneur Paul Careless, made tens of millions of pounds in fees from carrying out similar work for London Capital & Finance. LCF collapsed early last year, putting at risk £236 million of savings invested by more than 11,000 largely elderly people.

Many LCF investors also bought Blackmore bonds.

Draft accounts for 2018 - the most recent filing - seen by the Evening Standard show Blackmore paid £2.5 million in distribution fees, on top of £3.2 million the previous year which went to Surge.

It also paid "management fees" of £2.2 million, on top of £1.4 million the previous year.

In the 2017 accounts, Blackmore says the management fees went to a company called Blackmore Group Limited which is owned by founders McCreesh and Nunn. This has previously been explained as "running costs".

Its collapse will raise renewed questions about the lack of regulation of so-called mini-bonds, which are sold to retail investors but are outside the governance remit of the Financial Conduct Authority.

Documents seen by the Evening Standard show at least some of the bonds were insured through a broker called All Seasons Underwriting Insurance Brokers.

Oak Fund Services, trustee to the bondholders, called in the administrators. Some bondholders have contacted the Evening Standard to criticise Oak for not doing enough to safeguard their position.

Blackmore's collapse adds to those of many other high risk investment firms, including Basset & Gold, MJS, Carlauren, Asset Life and Park First.

One of the lenders Blackmore used to mortgage its properties was a firm called Amicus, which also raised money from retail investors and has also collapsed.