City Credit Capital (UK) Limited (CCCUK), the operator of FX/CFDs broker brands CIX Markets and Markets Trader and now placed under administration, is short of £10 million of its Professional clients' monies, which the administrators might not be able to recover.

Has City Credit Capital Lost Clients' Monies?

According to a recent statement of the administrator's proposal, CCCUK's largest trading counterparty was Malaysia-based CCC (Labun) Limited, which took steps to enter liquidation. CCC Labun owed CCCUK about £7.7 million. Further, the liquidation of CCC Labun resulted in the non-recovery of a parent company loan of another £3.1 million.

The two administrators of the CCCUK, Begbies Traynor (Central) LLP and AABRS Limited, highlighted that the invested funds in CCC Labun were advanced to the now-failed broker by its professional investors.

"As a result of the liquidation of Labun, the Company was unable to repay funds to professional investors in accordance with the terms of contracts. It is currently estimated that c.£10m remains due to various professional investors in this regard," the proposal filed with the Companies House stated.

"Following the failure of Labun and the related inability of the Company to return to its professional investors, the Company came under increasing pressure from professional investors to repay balances due. This culminated in the receipt of a statutory demand from one professional investor, which the Company could not meet. Had an administration appointment not been made, it is likely that the Company would have been wound up by one or more of its creditors."

A Bankrupt Broker

CCCUK was incorporated on December 19, 2001, as Smart Link Financial Services (UK) Limited and was renamed a year later. The Company entered into bankruptcy administration at the end of June, appointing two administrators.

Though the official statement by the Financial Conduct Authority (FCA) did not mention the exact reason for the bankruptcy Bankruptcy Bankruptcy or insolvency constitutes a legal term and refers to being unable to repay debts. A business and a person can declare bankruptcy. When a person or company claims bankruptcy, it is described as a voluntary bankruptcy, and when your debtors force you into bankruptcy, it is referred to as involuntary. A voluntary bankruptcy occurs when the debtor or borrower, the party that owes the money files with the courts. Involuntary bankruptcy happens when your credits file a petition with the co Bankruptcy or insolvency constitutes a legal term and refers to being unable to repay debts. A business and a person can declare bankruptcy. When a person or company claims bankruptcy, it is described as a voluntary bankruptcy, and when your debtors force you into bankruptcy, it is referred to as involuntary. A voluntary bankruptcy occurs when the debtor or borrower, the party that owes the money files with the courts. Involuntary bankruptcy happens when your credits file a petition with the co Read this Term, the Company's business tumbled heavily in the past few years. As Finance Magnates reported earlier, CCCUK ended 2021 with a decrease of 41 percent in its margin-in, which determines its profitability by calculating the difference between the price at which a product is sold and the cost of production.

Critical Financial Situation

It generated only £1.2 million in 2021, with a loss of £3.8 million. The declining performance can be determined from its £13.6 million in revenue in 2017 when it was also profitable.

The administrators' proposal revealed that £989,874.79 in cash was recovered from the Company. An additional £956,242.76 was received from specially segregated investor creditors client funds. The administrators have highlighted that there are no known secured creditors of CCCUK.

"We envisage that all unsecured retail investor creditors will be paid in full," the administrators noted. "This position remains subject to change if additional unknown clients' money claims are received."