Dolphin Trust, now trading as German Property Group (GPG), have released a further update on 13th May 2020 to provide further information in relation to their ongoing liquidity issues.
A number of our clients have contacted us following receipt of a letter received recently in respect of their Pension funds invested with Dolphin Trust. Please click here to view a full copy of the update being sent from GPG.
The newly formed “committee”, which represents an also recently formed company, set up in March of this year, is making some observations and attempting to advise clients in respect of the situation surrounding Dolphin Trust.
To summarise the letter the main points are:
– The previously stated aim of selling the business to another investor has failed.
– The committee is suggesting that there are only two options now available – one being insolvency and the other being “Reconstruction”.
– In relation to Insolvency of firm the “committee” is stating that this would take seven years or more to finalise, that the clients would only receive 5-10% of their initial funds back, and that the process would involve large professional fees.
– The committee is favouring “Reconstruction” and wants everyone to transfer the assets to a new company in order to develop the properties themselves, under guidance form the committee, utilising the services of a legal firm.
We note that no mention of the Financial Conduct Authority (FCA) claims process available to clients is referenced at any stage of the update.
As a specialist claims adviser, we would make some observations.
A reason highlighted for not considering option 1; insolvency, is the high cost of fees, but that would also almost certainly be the case in the event of choosing option 2; transferring the assets to another company, developing the properties and paying for fees for reputable legal advice.
The letter openly admits that the process and timescale for option 2 is unknown and will likely be lengthy, which was also a reason noted for not considering insolvency, due to the unsubstantiated seven years quoted.
The statement that there is a portfolio of projects, that cost several hundred million euros to buy, would provide returns more than those received from insolvency is an assumption and not “proven”. This assumption was made without access to the company accounts.
The expectation that the moving of assets to a new company and the development of them will result in the realisation of 50% of client’s funds is purely speculative.
The update is correct, it would be a leap of faith from investors to agree to the transfer of assets.
CLAIMS PROCESS VIA SECURITY AND WEALTH FINANCIAL RECOVERIES LIMITED
No mention is made of a claims process in any of the considerations made in the update.
The reason for that is not evident, however, it may be that clients involved with the proposals made cash investments into Dolphin as opposed to clients who would have invested via a Pension. Clients who made cash investments, without the use of an IFA or Pension provider, are unlikely to have legal grounds for a claim and would receive nothing back via the FCA’s compensation services.
Clients who have invested via a regulated Pension provider should expect to be able to receive a return of 100% of their investment, via the FCA’s compensation services, if Dolphin Trust were to become insolvent. However, it is not clear as to the validity of a potential claim via the FCA’s compensation services, should a client sign to agree to move the assets to another firm.
As specialist Claims Advisers we make claims against the FCA regulated entities connected with the transfer of a Pension.
Insolvency proceedings may “uncover” assets or the movement of assets prior to the current situation.
It is important to note that the criteria for a claim against an FCA regulated entity include compensation up to a limit of £85,000.
In order to find out if you would be valid for potential claim on your GPG investment please contact us via telephone on 01782 844844, via email at [email protected], or by completing the contact form on our website.