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A world of trouble: counting up the Stirling Mortimer claims
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by Daniel Grote on Feb 21, 2013 at 15:49
Earlier this month New Model Adviser® reported on the multitude of claims being pursued by troubled fund Stirling Mortimer Global Property. Getting to grips with these claims and how they affect the various sub-funds housed within that grouping is a complicated process. Here we outline exactly which funds are affected and how much they are seeking to claim.
The Stirling Mortimer Global Property fund is structured in a similar way to the Arch Cru funds: one umbrella fund, with sub-funds structured as protected cell companies listed on the Channel Islands stock exchange. Each of the funds invested in right-to-purchase (RTP) contracts for properties around the globe, aiming to sell those on for profit during the construction process. But, as the graphic on this page shows, that strategy has come unstuck.
Click on the highlighted areas below to find out more about Stirling's funds.
No 3 Fund (Spain)
Net asset value: £17.5 million
Claims: £17.2 million from Spanish property developers Geprolar (now in administration) and Prasur due to non-delivery of properties, and former lawyers Arcos & Lamers Asociados over excessive fees.
Progress: Stirling Mortimer was successful in a previous case against Geprolar and said, as a result, it was confident of the success of further claims against it. A preliminary hearing against Prasur has been held. Stirling Mortimer said it was committed to recovering money from Arcos but that it could only proceed ‘within the boundaries of the Spanish legal system’. If the cases fail and no RTPs are sold, the fund would have to complete on the properties, costing £21.2 million.
No 5 Fund (Spain)
Net asset value: £4.7 million
Claims: £5.6 million from Spanish property developers Geprolar (now in administration) due to non-delivery of properties, from former lawyers Arcos & Lamers Asociados over excessive fees, and a further amount related to its settlement with ELS and Ezaz.
Progress: Was successful in previous case against Geprolar and said as a result it was confident of the outcome of further claims against it. The settlement with ELS and Ezaz follows the misappropriation of around £810,000 from the fund. It has recovered around £560,000 and said it was ‘making every effort’ to recover the remainder. It said it was committed to recovering money from Arcos but that it could only proceed ‘within the boundaries of the Spanish legal system’. If the cases were unsuccessful and no RTPs were sold, the fund would need to complete on properties, costing £7.1 million.
No 6 Fund (Morocco)
Net asset value: £7.5 million
Claims: Reached a settlement with a developer for the repayment of £5.9 million.
Progress: The developer missed deadlines for delivery of properties. It settled to avoid a court battle. It delayed on its first payment of £1.9 million due in November last year, and its next payment of around £400,000 is due in April.
No 4 Fund (Cape Verde)
Net asset value: £41.9 million
Claims: £14.4 million from ELS International Lawyers (now in administration) and following its settlement with former ELS partner Joe Ezaz. The amount it is claiming from ELS stands at around £11.9 million, and relates to money it says it paid to the firm for RTP contracts for two sites, Murdeira Beach and Paradise Beach, but which developers never received. The money it is claiming from Ezaz relates to an out-of-court settlement reached in January last year. The settlement followed a High Court order for ELS to pay Stirling Mortimer £8.3 million, the bulk of which was owed to the No 4 Fund.
Progress: The board of the fund has written to ELS about its £11.9 million claim, and said it was ‘investigating all possibilities of recovering the monies owed to the fund’. Following the settlement with Ezaz, Stirling Mortimer has recovered around £3 million from ELS insurers, £3 million from the sale of Ezaz’s assets, and is still pursuing around £2.5 million.
No 7 Fund (Cape Verde II)
Net asset value: £19.2 million
Claims: £20.2 million, including £10.1 million from the developer at its Fortim Mindelo site, for non-delivery of properties. It said a further £6.6 million was owed from ELS over money it says it paid to the firm for RTP contracts, but which the developers never received. A further £3.4 million is owed from Stately International Investments.
Progress: The board of the fund is in the process of starting legal action against the developer and said it believed it had ‘a good chance of success’, adding that it believed the funds being claimed from ELS were ‘recoverable’ despite the law firm’s collapse into administration. However, it conceded the amount it was seeking from Stately was unlikely to be received, and has provided for it. If the Fortim Mindelo claim is unsuccessful and the RTPs fail to sell the funds will need to complete on the properties on the site, costing £15.9 million.
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