Norwich & Peterborough Building Society (N&PBS) has joined forces with US hedge fund CarVal in a last ditch bid to save cash-starved Lifemark from liquidation.
A formal announcement on arrangements for a bridging loan facility for Lifemark involving the two firms is expected on Monday.
CarVal pulled out from a solo $60m rescue deal for the fund in July. It had already stumped up £3.5m in short-term loans to Lifemark, which has £350m of investors' money tied-up in traded life-settlement assets.
N&P has joined the US hedge fund, in a deal brokered by PricewaterhouseCoopers (PwC), as a condition of the FSA granting it a temporary waiver on complaints, according to sources close to the situation.
About 300 N&P customers are taking legal advice on claims for compensation against the building society, which they allege mis-sold and over-exposed them to Keydata.
PwC, which is the administrator for insolvent investment firm Keydata which sold Lifemark-backed bonds in the UK, is said to be facing a "massive" write-down if Lifemark fails.
Lifemark administrator, KPMG's Eric Collard, will lose 5% of the portfolio unless the fund receives emergency bridging finance by next Tuesday to pay premiums on its life policy assets by Thursday.
This could force the Financial Services Compensation Scheme (FSCS) to step in with blanket compensation for investors. At the moment, claimants must prove they are "eligible" for the scheme.
Keydata founder and former Lifemark director Stewart Ford had been involved in talks to help rescue the fund,However, N&P became the favourite partner after controversial Ford was ruled out for his involvement with the company during its chequered financial history.
N&P this week wrote to Keydata-exposed customers to say their complaints about the advice its IFAs gave will remain unresolved for at least five more weeks.
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