Tiuta backer Connaught Asset Management enters administration

The directors of Connaught Asset Management have placed the company into administration.

Peter Hollis of KPF Advisory was appointed the administrator on 18 September, the same day CAM directors filed the notice to appoint administrators.

In a statement, KPF Advisory says: “Connaught Asset Management Limited went into administration on 18 September 2012, pursuant to a notice of appointment of an administrator, filed by the company’s board of directors that same day. Peter Hollis of KPF Advisory was appointed administrator.

“The administration order provides a moratorium to the company which will enable the administrator to formulate proposals for dealing with the company’s business and assets and to refer to the investors in the surviving investment funds in which the company has an interest, as to their wishes for the future of these funds.”

KPF will investigate the role of the directors in the collapse of its Income Series 1 and 2 funds, both of which provided funding lines to subsidiaries of bridging lender Tiuta Plc.

The news comes a week after investors voted overwhelmingly in favour of placing the £118m Income Series 1 fund, which provided a £105m funding line to Tiuta International, into liquidation.

Last month, Money Marketing revealed Tiuta Plc made a pre-tax loss of £37.8m in the 18 months to 30 September 2011.

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, Money Marketing 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, which was used to fund another Tiuta subsidiary called Tiuta Development Finance, was made in June. A Series 3 fund, which was not linked to Tiuta loans and raised around £22m, was wound down in July due to a spike in redemptions.

CAM bought Tiuta International and Tiuta Development Finance, the Tiuta Plc subsidiaries that used the Series 1 and Series 2 funds respectively , for a £1 in June. In July, Money Marketing revealed Tiuta International had been placed into administration by CAM.