The Connaught Asset Management board has proposed winding up the suspended Connaught Income Series 2 offshore fund.
Connaught's board said in a meeting on Tuesday it will propose winding down the unregulated collective investment scheme (UCIS) at an extraordinary general meeting (EGM) of unit holders.
The fund was suspended from trading on the Channel Islands Stock Exchange after failing to pay scheduled quarterly interest payments in April.
The suspension of the calculation of the net asset value of the fund, along with the issue and redemption of units, will continue until unit holders vote on the proposals at the EGM.
Yesterday, parent company Connaught Asset Management acquired Tiuta Development Finance, the specialist partner to the fund, in a move Connaught said will "significantly assist" the winding up process.
"The investment adviser (Connaught Asset Management) and the investment manager (Connaught Asset Management Limited) both believe bringing the specialist partner (Tiuta) into the investment adviser's group and under its control will significantly assist in the winding-up process and the realisation of the fund's investments, with a view to maximising unit-holder returns," Connaught said in a statement on the Channel Islands Stock Exchange.
The proposal to wind up the fund means the annualised interest rate payment to unit-holders scheduled for July 2012 will not be paid.
In March, Connaught Asset Management suspended redemptions from its Income Fund Series 1 after a review flagged the possibility some of the fund's loans may be under-secured.
Last year the Financial Services Authority warned on Connaught's Series 1 and offshore Series 2 income funds, saying marketing literature making comparison between the "low risk" funds and fixed-rate bank accounts was misleading.
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