On 27 April 2018, the High Court in Manchester appointed new administrators to Collateral (UK) Ltd (Collateral UK), Collateral Sales Ltd and Collateral Security Trustee Ltd (together, the Collateral Companies) following an application by the FCA.
The Collateral Companies operated a peer-to-peer lending platform through a website (collateraluk.com) and Collateral UK Ltd purported to hold an interim permission from the FCA to carry on regulated activities. In fact, none of the Collateral Companies held any valid authorisation or permission to carry on regulated activities. When challenged by the FCA, the Collateral Companies agreed to cease their lending activities and, on 26 February 2018, the lending platform became inoperative.
The Collateral Companies were required to obtain the approval of the FCA when appointing an administrator. This is designed to protect investors by ensuring an independent person conducts the administration in the best interests of the investors. This did not happen. Accordingly the FCA has intervened to ensure investors are protected as the law requires.
On 16 March 2018, the High Court adjourned the FCA’s applications to 27 April 2018. Until then, the Court ordered that, barring incoming payment of loan interest and repayments and certain other administrative steps, the substantive progress of the administration should be paused.
On 27 April 2018, the High Court in Manchester appointed new administrators to Collateral (UK) Ltd (Collateral UK), Collateral Sales Ltd and Collateral Security Trustee Ltd (together, the Collateral Companies) following an application by the FCA. The Collateral Companies had been placed into administration by their Directors on 28 February 2018. The Court agreed that the appointment of the previous administrator had been invalid and has now appointed Messrs Shane Crooks and Mark Shaw of BDO LLP as joint administrators of the Collateral Companies to protect the interests of creditors.
The FCA took court action to ensure that the interests of creditors and investors affected by Collateral UK’s administration were properly protected and treated fairly by a validly appointed administrator who is independent of anyone connected to the Collateral Companies. On 10 May 2019, each of the Collateral Companies entered creditors’ voluntary liquidation.