This article reflects the opinions of its author and not necessarily those of ShareSoc.
Cliff Weight originally highlighted the Wellesley Investors Action Group, in this article.
I still encourage those affected to join Neil Taylor’s group, but I’ve had some requests for an update from affected investors. Neil has kindly provided the following update:
To put you in the picture, Wellesley Finance Ltd, the company that went into a Company Voluntary Arrangement (CVA) on 25 September 2020, has failed to pay back investors’ payments. It is complicated, so I will try to give you some insight.
As you may know, Wellesley Group collapsed into a CVA on 25 September 2020, which was approved on the 13 October 2020. This affected three trading companies within the “Wellesley Group”, namely Wellesley & Co Ltd (WACL), the originally FCA regulated p2p entity, Wellesley Finance PLC (mini bond/PMB company, and an associate company called Wellesley Secured Finance PLC (WSFP) who operated listed property bonds from April 2019, after the FCA, strangely gave full permission to WACL in Feb 2019, when it was clear the Wellesley Group was insolvent at the time.
Investors were offered a range of complex settlements via the CVA. The investors at the time amounted to £134.7m and the return to investors so far is £67.3m, so 50% return. This return varies depending on what products you invested in, the range of 1p/£ to 83p/£.
3,489 Investors in Wellesley Group products, namely Wellesley mini-bond (Series s1/s2/s3), were offered 1p/£ cash, or alternatively a “preferred” shares route in Wellesley Finance PLC. This company is now called Wellesley Finance Ltd (WFL). The preferred shares pledged to pay back investors only 25p/£ of their investment, but this was at least better than the 1p/£ cash settlement.
The CVA gave the above option to Property Mini Bond holders too (PMB), who were offered more by way of cash settlement. If they did not elect for the cash option, the preferred share route was the default option, many may have been caught out here by the speed of the CVA being signed off, only 3 weeks between issue and approval. We estimate that up to 4,250 investors have preferred shares holdings.
The preferred shares issue amounts to 10,089,328 shares of £1 each, so £10,089,328 in nominal value. The preferred shares did not have any visible preferred status, but the CVA PAYMENT PLAN pledged to repay (redeem them-buy-back) these shares in two instalments, one in December 2023 and the second instalment in December 2024.
The preferred shares could only be paid back on WFL hitting a profit threshold. This, in essence, was that repayment will only be made out of excess distributable profit over £5m. This appears not to have been made. In fact, we see that losses in WFL are reported in last published accounts to 31 December 2022. These losses are £1.46m.
It appears Wellesley Finance Ltd have not re-started the business with institutional investors as stated in the CVA. Minimal new business has been concluded so far over 2 years on.
Wellesley Investors Action Group (WIAG) have written to Wellesley on the 17 December 2023, as they have made no contact with investors. I have received a limited reply acknowledging our letter on the 29 December 2023. They intend to give a “general update” to investors in January 2024. We still have not heard anything, a scandalous and deplorable state of affairs. We have asked once again for the business plan and details of 2023 trading.
Wellesley and Kroll claim the share repayments are outside the CVA. This, of course, is nonsense: this was an integral feature of the CVA; alongside the sale of the loan book at the time to themselves for £30m less than its value at the time of the CVA. This is how they have continued, with taking investors funds, and not securing tangible and institutional investors so far.
Here is a copy of our letter sent to Wellesley on the 17 December 2023, this emailed and special delivery to their Registered Offices as we have no idea where they are trading.
We also have a very detailed and comprehensive complaint about Wellesley with the FCA which is being deferred every 6 months by the FCA. This is as a result of their enforcement actions and investigations being taken against Wellesley at present. Details of this investigation are totally unknown to us.
Neil Taylor, Wellesley Investors Action Group
Mark Bentley, Director, ShareSoc