The decision was made by the administrator, Link Fund Solutions, who decided that it was in the best interests of everyone, especially the fund’s investors, four months after it was initially suspended.
The fund was closed following a significant number of investors attempting to withdraw their money after a series of bad stock bets. This was compounded by the fund continuing to charge daily management fees of £65,000.
The fund claimed that the fees were necessary in order to pay wages and other essential costs while they moved investments away from smaller, illiquid assets into larger publicly quoted companies.
Most investors won’t get any money until mid-January at the earliest as there must be a notice period served of at least three months before the commencement of winding up.
Link Fund Solutions said: “After careful consideration, the decision has now been taken not to reopen the fund and instead wind it up as soon as practicable.
“This is with a view to returning cash to investors at the earliest opportunity” although they acknowledge that “It is not currently possible to predict when the orderly sale of these remaining assets will be fully complete and when the remaining capital distributions will be paid to you and the other investors.”
Neil Woodford, who has also been removed as investment manager of this fund although he continues to manage others, disagreed with the decision. He said: “This was Link’s decision and one I cannot accept, nor believe is in the long-term interests of LF Woodford Equity Income fund investors.”
The Financial Conduct Authority backed Link and said they welcomed the removal of uncertainty.
“We recognise that investors have been concerned about the state of their investment since the beginning of June.
“Winding up the fund will allow the return of money to investors through a number of distributions, likely to begin in January 2020. This means investors should receive some of their money back soon than had the fund remained suspended for a longer period.”
Winding up a company can be a complicated and drawn-out process for everybody involved. If your company is undergoing the procedure then you need to know what is happening, what the next stage is and what, if anything is required from you.
If you feel your business may need to be formally wound up, it’s worth taking advice at an early stage before you face a winding-up petition, and like Neil Woodford you could find the matter taken out of your control. Contact our business rescue experts for a free initial consultation.