Court battle looms for trust

THE fate of a split capital trust firm that went into administration last Friday might end up being decided by Class Law, which is bringing group litigation against fund managers involved in the scandal.

Exeter Fund Managers appointed two accountants from PricewaterhouseCoopers after deciding that claims against it totalled more than the remaining assets of between £5m and £6m.

The investment company ran a series of funds and trusts caught up in the splits saga, which involved misrepresentation of risks. Eighteen firms agreed with the Financial Services Authority to compensate investors, but Exeter, BFS and BC Fund Management stayed out of the scheme.

Exeter faced 315 individual claims through the Financial Ombudsman Scheme while Class Law represented a further 25 investors who had lost more than £1m.

The solicitors filed a suit on 24 February and because of the size of the claim it is likely to play a leading role in the winding up of the company. Exeter's parent company had sold almost all the business to New Star Asset Management and the funds raised were effectively frozen by the FSA to pay investors' claims.

Stephen Alexander, a partner at Class Law, said the appointment of administrators made 'no difference' to the lawsuits. 'They will proceed as normal,' he said.

But as a major potential creditor, Class Law may be in a position to force the appointment of a liquidator and have the company wound up.