The Financial Services Compensation Scheme (FSCS) may avoid picking up the whole bill for the suspended ARM Asset Backed Securities investment as the fund's board has found a buyer for the life-settlement policies in its portfolio.
The Keydata-style fund, which at its peak had a value of nearly £200m, never achieved regulatory approval, and in August 2011 was frozen by the CSSF in Luxembourg (where the fund is based), leaving more than 1,500 clients locked out of their investments.
Financial Credit Investment Limited has bought the portfolio for an undisclosed "fixed amount of cash", some of which shall be paid upfront and the balance to be paid over a period of time, according to an announcement on the Irish Stock Exchange.
It is not clear whether this sale will mean investors get all of their money back, however levy payers will be hoping it means the FSCS will swerve the bill for the failed investment.
Rockingham Retirement was a major UK distributor of the ARM fund. It was declared in default this month by the FSCS, meaning the compensation service would potentially foot the bill for the firm's ARM sales - payouts paid for by the industry levy.
The stock exchange note said the corporate restructure process has now come to a "crucial point in time".
The first part of the restructure strategy, de-risking of the portfolio, has now been achieved, it said.
ARM is now considering several options as to the future of the company, including the modelling of a comprehensive restructure.
The board is also actively persuing a resolution of the 'pending monies' issue, it said. Pending monies are those where investors handed over their moeny but it was never invested.
"It is hoped that extensive legal proceedings can be avoided," the note said.
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