The debt collection odyssey for the industry triggered by the SNB panic in January 2015 apparently still haunts some market participants. In the latest update regarding the bankruptcy proceedings of LQD Markets in the UK, the special administrators shared some gloomy data.
A debt collection agency which was hired in the aftermath of the bankruptcy proceeding case has managed to collect a whopping £745.63 in six months. At this pace, the repayment of the £358,675 of outstanding debt will take over 240 years.
The inconvenience for the creditors of LQD Markets is that bankruptcy proceedings cannot close before the outstanding balance has been collected. The debt-collecting agency was hired last year by the special administrators and has agreed to provide its services for a fee of 25% of net funds realised.
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The individuals who traded the Swiss franc in the run-up to the SNB crisis are likely to be facing a protracted period of financial difficulty. Their ill-timed trading decision to short the Swiss currency into the SNB’s floor removal of the EUR/CHF pair caused them massive negative balances.
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In the meantime, the costs associated with the bankruptcy proceeding keep piling on the creditors to the benefit of the special administrators. They have just announced that they are filing an application with the UK bankruptcy court to request a bar date for clients to submit their claims. The distribution process is set to commence after that.
Meanwhile, the total cost of the special administrator’s operation is £384,219.60. The estimated client deficiency stands at $3.89 million. According to documents related to the case, creditors can expect 12 cents to the dollar. Clients of the company have already claimed close to £4 million from the UK FSCS.
223 Introducing Brokers Owed a Commission
A total of 223 introducing brokers (IBs) are also owed a commission. They have been classified by the special administrators as unsecured creditors. With the massive fees incurred by the company during the bankruptcy proceeding and the unlikely recovery of missing client money funds, which have surpassed $3 million, IBs are unlikely to collect any funds from the special administration.
Legal fees in this case have to date totalled over £411,000. The final estimates on part of the special administrators nets them a fee of £483,483.
Unlike the Alpari UK case, where clients received between 78 and 80 cents to the dollar, creditors of LQD Markets are unlikely to be so lucky.