ALTERNATIVE LIQUIDITY SOLUTIONS LIMITED IN LIQUIDATION JOINT LIQUIDATORS ANNUAL REPORT 14 TH MAY 2014

Transcription

1 JOINT LIQUIDATORS ANNUAL REPORT 14 TH MAY 2014

2 CONTENTS Page(s) Joint Liquidators Report 2 to 6 Appendices: Appendix 1 Liquidators Report on Receipts and Payments 7 & 8 Appendix 2 Distribution Received 9 Appendix 3 List of Investments held 10 1

3 JOINT LIQUIDATORS REPORT 1. Background Alternative Liquidity Solutions Limited (the Company ) was placed into liquidation by the members at an Extraordinary General Meeting held on Wednesday, 15 th May The Joint Liquidators hereby present their report on the progress of the liquidation for the year to 14 th May Statutory Information Company name: Alternative Liquidity Solutions Limited (formerly Saltus European Debt Strategies Limited) Company number: Incorporation date: 14 th May 2007 Registered office: Former Trading Address: 7 New Street, St Peter Port, Guernsey, GY1 2PF Sarnia House, Le Truchot, St Peter Port, Guernsey GY1 4NA Prior to liquidation, the Company was registered as a closed-ended fund regulated under the POI (Protection of Investors) law (licence number ). It was also listed on the London Stock Exchange ( LSE ). In an announcement to the exchange made on 16 th November 2012, the Company confirmed that since the additional share placement had been unsuccessful, all of the Company s existing ordinary shares would be compulsory redeemed, the ordinary shares would be automatically converted into unlisted ( run off ) shares. The Company s shares were delisted from the Official List and their admission to trading on the Main Market of the LSE was cancelled. The Company has been in orderly wind-down ever since. Prior to entering into liquidation, redemptions instructions were issued on all investments in the underlying portfolio. This report covers the work undertaken in the liquidation of the Company. 3. Details of the progress for the period under review The principle activities undertaken during the Period were: Establishing a liquidation bank account Whilst banks accounts held with Butterfield Bank (Guernsey) Limited (the principal custodian ) have been retained to ensure continuity of distribution receipts from the underlying investments, a Liquidation bank account was opened with Lloyds Banking Group in Guernsey for payment of distributions to shareholders and to facilitate the payment of ongoing expenses of the liquidation. Registrar Function and Collection of Client Due Diligence (CDD) on the underlying members The Registrar function was taken over by the Liquidators and in order to meet the requirements detailed in the prescribed business handbook rules for combatting money laundering, it was necessary to review and refresh the Client Due Diligence (CDD) held on each investor. As part of our CDD documentation review we ensured that: a) That payments are to be made only to an account in the name of the investor; 2

4 b) That in the case of nominee entities, they are regulated or wholly owned subsidiaries of entities regulated by the Financial Control Authority; c) That a liquidators certificate is completed and held including the account details for payment of future distributions and confirming that appropriate procedures are in place, which are in accordance with FATF Recommendations and international AML Standards. Investment Management arrangements Under the terms of the Investment Management Agreement (the Agreement ), the Investment Manager, Saltus (C.I.) Limited, was entitled to continue to receive fees on investments held by the Company post termination of the Agreement. The Investment Manager agreed to continue to provide services in line with existing fee arrangements. At appointment the Liquidators confirmed their fee arrangements and the services to be provided. The services are delegated to the Sub Investment Manager, Saltus Partners LLP, who agreed to continue to provide to the Manager and the Liquidators advice on the underlying portfolio and to provide ongoing communications with shareholders. Custodian arrangements The Custodian, Butterfield Bank (Guernsey) Limited, agreed to continue to act under the existing terms on appointment of the liquidators. 4. Receipts and Payments Included in Appendix 1 of this report is a summary of the receipts and payments for the Company, together with a summary of the distributions received from the underlying portfolio of investments during the period. An explanation of the principal items included in the receipts and payments account are as follows: RECEIPTS Cash Held at Butterfield Bank (Guernsey) Limited At the date of the liquidation, the balance on the Company s accounts held with Butterfield Bank was 2,281, (sterling equivalent). The balances were realised and lodged into the estate bank account. Distributions from underlying investments Distributions received from the underlying investment portfolio totalled 4,205, (sterling equivalent). A breakdown by underlying investment is given in Appendix 2. Bank Interest Received The total interest received during the liquidation was 4, Sundry Income Sundry Income of 1, represents a rebate on the D & O insurance for the period post liquidation. 3

5 PAYMENTS Legal Fees 4,880 was paid for legal fees in respect of pre-liquidation advice provided to the Company. Custody Fees Custody fees totalling 7, were paid to Butterfield Bank (Guernsey) Limited during the period. Investment Management Fees Monthly management fees totalling 102, have been paid from the Company s bank accounts to Saltus (C.I.) Limited during the period; representing a fee of 1% of the quarterly NAV. A further 8, for April 2014, together with (pro-rata) 2, for May 2014, has been paid; which have yet to clear through the liquidation bank account. Registrar Fees Capita Registrar fees totalling 4, were paid to the previous Registrar, Capita, being the final fees covering the period to 7 th June London Stock Exchange Fees 1, was paid in regards to pre-liquidation fees. Payment of an interim distribution Substantial cash realisations from the underlying investments have been received, however sufficient funds needed to be held back to cover any potential liabilities arising from the limited partnership investments; which may arise through either uncalled capital commitments or claw back provisions under the limited partnership agreements. Having reviewed the various limited partnership agreements, the joint liquidators have assessed the maximum potential liability to shareholders and feel that it is prudent to retain, at the current time, a total of 1,437,000 from the interim distribution to cover any potential liabilities. Having taken the above into account, an interim distribution of 4,000,000 was made in May 2014 to shareholders. This represented a distribution of per share issued. Whilst the overwhelming majority of members received their distribution, we were unable to distribute to one shareholder due to additional CDD being required; this has been requested and upon receipt, the payment will be released. In addition, as explained in the notes to Appendix 1, at the time of writing this report the distribution made to one shareholder had been subsequently returned to the Company s bank account and this is currently under investigation We are looking at the possibility of buying transactional insurance to cover the potential liability under the various limited partnership agreements. This would allow us to release some of the retention but we would still need to hold back funds to cover future calls and expenses of the liquidation. Once any 4

6 future calls are either paid or cancelled, then the prospect of buying insurance to cover any potential liability under the underlying partnership investments indemnity clauses becomes more attractive, we will therefore keep this under constant review. Other expenses Other expenses totalling 1, were incurred during the period; which included bank charges, ongoing ICT (website) hosting fees and other pre-liquidation costs. 5. Liquidators Remuneration At the meeting held on 15 th May 2013 placing the Company into liquidation, a resolution was passed approving the appointment of David Rubin and Trudi Clark of David Rubin & Partners (C.I.) Limited as joint liquidators of the Company in accordance with the Companies Law and on the terms set out in the engagement letter (including remuneration). The basis of remuneration was fixed at David Rubin & Partners (C.I.) Limited s charge out rates for time properly spent by the joint liquidators and their staff in attending to matters arising in the winding up. A schedule of the charge out rates was presented at the time of our appointment and there has not been any material increase in the rates during this appointment. Our current hourly charge-out rates are as follows: Partners/Office Holders Managers/Senior Managers Senior Administrators Junior Administrators Amounts billed to Date In the year to 14 th May 2014, the liquidators raised bills for professional services totalling 20,425.66, which included 12,000 for time spent on Registrar functions and 8,250 for the day to day routine work of the liquidation. In addition to the invoice for fees, a further was charged in disbursements; being the in main postage costs, teleconference costs and Guernsey Registry fees. Our current unbilled costs are 26, we intend to raise an additional interim bill of 11,750, plus any outstanding distributions, for the year under review. 6. Looking ahead - notification of additional distributions/proceeds from sales As and when sufficient distributions are received from the underlying portfolio the Liquidators will consider further distributions. Currently we are aware of the following: A distribution payment of EUR 296,502 in regards to the investment in OCM European Principal Opportunities Fund II LP; Proceeds of EUR 57, from the sale of shares in Fortelus Special Situations Fund Ltd Class S EUR; Proceeds of USD 52, from the sale of shares in Fortelus Special Situations Fund Ltd Class S USD; Proceeds of EUR 97, from the sale of 1, shares in Ironshield Special Situations Fund Ltd Class SP EUR; 5

7 Proceeds of EUR from the sale of shares in King Street Europe Limited Class S Series 23; Fund retentions totalling EUR 3, for the sale of shares in King Street Europe Limited. 7. Estimated and unaudited Net Asset Value Net Asset Value (NAV) calculations are estimated quarterly by Saltus Partners LLP. At close of business on 31 st March 2014, the Company s estimated NAV was per share ( per share, adjusted to take into account the 4,000,000 May 2014 distribution). 8. Next Report We are required to provide a further report on the progress of the liquidation at the next anniversary, unless we have concluded matters prior to that, in which case we will write to all members with our final report ahead of convening the final general meeting of the Company. We trust you will find this report adequate for your purposes but should you require any further information, please do not hesitate to contact us. TRUDI CLARK For and on behalf of David Rubin and Trudi Clark As Joint Liquidators of Alternative Liquidity Solutions Limited 19 th June

8 APPENDIX 1 RECEIPTS AND PAYMENTS ACCOUNT FOR THE PERIOD 15 TH MAY 2013 TO 14 TH MAY 2014 RECEIPTS Notes GBP Cash held by Butterfield Bank (Guernsey) on liquidation 2,281, Investments - Distributions from underlying funds See appendix 2 4,205, Bank Interest Received 4, Sundry Receipt 1 1, TOTAL RECEIPTS 6,493, PAYMENTS Bank Charges Audit Fee London Stock Exchange Fee (pre Liquidation) 1, Legal Fees (pre Liquidation) 4, Provisional Liquidators Fees 20, Capita Registrar Fees - Final to 7th June , Saltus Management Fees - up to 31st March , Butterfield Bank (Guernsey) Custody Fees 7, RDIR Management Final Fee ICT Quarterly Hosting Fees - Datadial System Sundry Expenses (pre Liquidation) Distributions made to Shareholders 2 4,000, TOTAL PAYMENTS 4,142, ASSETS AVAILABLE FOR DISTRIBUTION 2,351, REPRESENTED BY: Cash at Bank Lloyds GBP Account 130, Butterfield Bank GBP Account 27, Butterfield Bank EURO Account 1,613, Butterfield Bank USD Account 588, Pending shareholder distributions 3 (7,737.20) 2,351, SHARES IN ISSUE Run Off Shares 13,172,

9 RECEIPTS AND PAYMENTS ACCOUNT FOR THE PERIOD 15 TH MAY 2013 TO 14 TH MAY 2014 (CONTINUED) NOTES 1. Sundry Receipts Relates to a rebate on the company s D & O policy. 2. Distribution An interim distribution totalling GBP 4,000,000 was paid on 9 th May 2014, representing a distribution per share of GBP for the 13,172,731 run-off shares in issue. Client due diligence has not been satisfied in regards to one investor and payment was subsequently returned to the Company s bank account in regards to a further shareholder. The joint liquidators continue to investigate these distributions and payment will be made as and when appropriate to do so. 3. Pending Shareholder Distributions GBP Awaiting CDD (893.67) Returned distribution payment (6,843.53) Total (7,737.20) 8

10 APPENDIX 2 DISTRIBUTIONS RECEIVED FROM UNDERLYING FUNDS Apollo European Principle Finance Fund LP 2,141, King Street Europe Ltd EUR 575, King Street Europe Ltd USD 21, Strategic Value Restructuring Fund Ltd 481, Trafalgar Kahala Jet Fund Limited Euro Class A 136, Fortelus Special Situations Fund Ltd Class S EUR 95, Fortelus Special Situations Fund Ltd Class S USD 7, Ffenics I Fund LP EUR 45, Less: Calls Paid (13,667.29) 32, Ironshield Special Situation Fund Ltd Class SP EUR 165, Oaktree European Credit Opportunities Fund LP 4, OCM European Principal Opportunities Fund II LP 536, MKM Longboat Multi-Strategy Fund USD N Cl Vtg NI (in Liquidation) 4, Taconic Opportunity Offshore Fund Ltd 1, ,205,

11 APPENDIX 3 LIST OF INVESTMENTS HELD INVESTMENT NAME Limited Partnership Investments Apollo European Principal Finance Fund LP Ffenics I Fund LP EUR OCM European Principal Opportunities Fund II LP Oaktree European Credit Opportunities Fund LP SISU Capital Private Equity Fund A LP Fund Investments 23, Cognis I Fund B Series ,000 Delphi Corp 6.5% Global (DPH Holdings) 29,000 Delphi Corp 6.55% NTS USD ,000 Delphi Corp 7.125% DEB USD Fortelus Special Situations Fund Ltd Class S USD Series 1 B Fortelus Special Situations Fund Ltd Class S EUR Series 1 B 2, Ironshield Special Situations Fund Ltd Class SP EUR King Street Europe Ltd - Class S Series MKM Longboat Multi-Strategy Fund USD N Cl Vtg NI (in Liquidation) Trafalgar Discovery Fund EUR C U/1 Pending Retentions/Redemptions 57, Fortelus Special Situations Fund Ltd Class S EUR Series 1 B $52, Fortelus Special Situations Fund Ltd Class S USD Series 1 B 97, Ironshield Special Situations Fund Ltd Class SP EUR King Street Europe Limited Class S Series 23 3, King Street Europe Limited (fund retentions) 10