Peter Hollis of KPF Advisory has been appointed as administrator of Connaught.
Hollis will investigate the collapse of the Income Series 1, 2 and 3 funds, which provided credit lines to stricken bridging lender Tuita, a company that last month reported a pre-tax loss of more than £37m.
At a meeting in Birmingham last week, 92% of investors present voted to wind up the Series 1 fund, the largest of the three which at one point reached £118m.
The fund provided a total of £105m for Tiuta International Limited, an arm of Tiuta plc that entered administration in June.
Series 1 was suspended in March, with Series 2 following in April. In June Connaught said investors in the former would suffer a loss of £10m, or 10% of the fund, though at a meeting in August investors were shown illustrations positing a maximum of £53.2m to be recovered, with a worst case scenario of £46.5m.
The company was subject of an FSA warning shortly before the suspension of Series 1, which said Connaught had misled investors over the risk levels in investing in bridging loans.
“In the literature we have seen, the Connaught funds are described as ‘very low risk’ and ‘low risk’,” the notice read. “It makes comparisons between investing in them and putting your money in high street bank and building society accounts. We believe this is misleading.”
A statement from Tuita read: “Following the administration of Tiuta International as the principal lending arm, a decision has been taken with reflection and approval of the FSA to place Tiuta into administration.
“The process has yet to be completed and this step has been taken to preserve the integrity of the underlying business, the reputation of the Tiuta brand and also the lending platform.”
