FIXI Plc Administrators Recover More Than £840K in Cash Balances

The administrators of FIXI Plc, an institutional foreign Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term broker that went into administration in 2018, have provided a progress report, highlighting that they are in the process of paying the company’s creditors.

For FIXI, the broker’s creditors are mainly employees and former clients of the now-bankrupt broker. According to the report published by PricewaterhouseCoopers (PwC), which covers the 12 month period ending on the 30th of May 2020, the majority of the company’s employees were made redundant and have been compensated prior to the liquidation.

Since then, the joint administrators Douglas Nigel Rackham and Michael John Andrew Jervis have received a small number of claims from former employees located in the UK and Georgia.

According to the report created on the 16th of July 2020, it has been difficult for the administrators to establish the validity of all the claims due to insufficient accounting records. If the claims are proven to be valid, then the administrators should be able to pay the creditors in full within the next six months.

Background on FIXI plc administration

In addition to providing an update to the current situation with creditors, the administrators also shed more light on the events leading up to FIXI’s administration in 2018, and what has happened since then.

After reporting losses for a number of years, the FX broker reported to the Financial Conduct Authority (FCA) in December of 2018 that it was below the minimum capital threshold. This was due to poor revenues and lack of funds being funneled into the company by its main shareholder, Mr. Goran Drapac. The broker was unable to resolve these problems.

Mr. Drapac told the UK regulator on the 21st of December 2018 that he intended to formally wind down the operations of the broker and that he would meet all external liabilities. This was then put into an agreement on the 11th of January 2019 between Mr. Drapac, his company Drapac and FIXI.

FSCS has paid £1.26m in compensation

“As Fixi was authorised by the FCA and provided FSCS protected financial products, the FSCS has agreed to pay compensation of up to £85,000, to investment creditors that meet the relevant criteria. We have developed a protocol with the FSCS to facilitate the payment of compensation to those creditors,” the administrators said in the report.

As of the 30th of May 2020, PwC has received 79 claims from clients and creditors for FIXI. Out of these, 32 claims have been reviewed, agreed, and compensated by the FSCS. Overall, the FSCS has paid £1.26 million in compensation to the 32 clients.

“We have successfully recovered £843,640 of cash balances from the Company’s various bank accounts, electronic wallet accounts and funds held by solicitors. These funds have been secured in the liquidation bank accounts. In addition, we recovered funds previously held as segregated funds as outlined in the table below in the sum of £60,774 (converted using exchange rates as of 30 April 2020),” the report highlighted.

Drapac struggled to sell shares in AxiCorp

As part of this, Drapac intended to sell its 2,000 shares in AxiCorp to meet its financial Obligations Obligations In finance, an obligation is a financial responsibility where the terms of a contract must be met. Should an obligation between parties fail then the party who is at default may face legal action. In this scenario, the guilty party will not only have to agree to pay the set amount to fulfill the contractual arrangement but may also be responsible for covering all legal proceedings cost. Routine payments or outstanding debt of any kind are considered financial obligations, so if someone owes you In finance, an obligation is a financial responsibility where the terms of a contract must be met. Should an obligation between parties fail then the party who is at default may face legal action. In this scenario, the guilty party will not only have to agree to pay the set amount to fulfill the contractual arrangement but may also be responsible for covering all legal proceedings cost. Routine payments or outstanding debt of any kind are considered financial obligations, so if someone owes you Read this Term; however, it was only able to sell 300 of the shares worth £270,000 in February of 2019. Drapac continued to try and sell the remaining 1,700 shares across March and April of 2019, to no avail.

Because Drapac wasn’t making any progress in selling its shares, and after continued talks with the FCA, a board meeting with FIXI directors was held on the 1st of May 2019, where it was decided to put the broker into a CVL. Nigel Rackham and Michael Jervis were appointed joint liquidators of Fixi Plc at the end of the month - the 31st of May 2019.

“Throughout this process, Fixi was returning segregated funds to Segregated clients, having requested confirmation of payment details from all of them. Most Segregated clients were paid during this process. At the date of liquidation there were clients who had not responded and as a result have not had their funds returned,” the administrators said in their report.