Bridging lender Tiuta Plc and one of its primary funders Connaught Asset Management, which operated unregulated collective investment schemes, both entered administration last Friday.
The directors of bridging lender Tiuta Plc stated on Friday their intention to place the firm into administration.
The FSA has confirmed it approved the decision on 11 September but the decision still needs to be approved by the courts. A notice of intention has been filed to make David Rubin & Partners the firm’s administrator although this has not been finalised.
Last month, Mortgage Strategy revealed Tiuta Plc made a pre-tax loss of £37.8m in the 18 months to 30 September 2011.
In a statement from Tiuta it said: “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.”
Earlier on Friday, Mortgage Strategy revealed the directors of Connaught Asset Management had placed the company into administration. Two Tiuta subsidiaries, Tiuta International and Tiuta Development Finance, used the Connaught Series 1 and Series 2 Ucis funds to fund their lending. Peter Hollis of KPF Advisory was appointed the administrator on 18 September.
An investor in the Series 1 fund, who wished to remain anonymous, says: “We hope that once they are in insolvency procedures, then we will get to the truth and then we will deal with recovering monies for the benefit of those who invested.”
Earlier this month, Mortgage Strategy revealed 92 per cent of investors voted in favour of placing the £118m Income Series 1 fund, which provided a £105m funding line to Tiuta International, into liquidation.
The Series 1 fund was suspended in March and interest payments were not made. A review was commissioned to ascertain its true value.
Last month, Mortgage Strategy revealed investors faced losses of up to 50 per cent. An independent review by Duff and Phelps suggested recoveries would be between £46.5 and £53.2m of the £105.5m used to fund Tiuta.
A decision to wind down the Series 1 and £18m Series 2 fund was made in June. A £22m Series 3 fund, which was not linked to Tiuta loans, was wound down in July due to a spike in redemptions.
CAM bought Tiuta International and Tiuta Development Finance for a £1 in June. In July, Mortgage Strategy revealed Tiuta International had been placed into administration by CAM.