Blackmore Bonds: review and latest news 2021

Blackmore Bonds: review and latest news 2021 – that will be the topic of today’s article.

Nothing written here should be considered formal tax, financial, legal or any other kind of advice advice, and is written for entertainment purposes only, in other words isn’t a solicitation to invest.

For any questions, or if you are looking to invest as an expat, you can contact me using  this form, or use the WhatsApp function below.

It has to be mentioned that BlackRock has now gone out of business, which shows the risks associated with such an investment.

This article was also completely written by my staff, and not me personally. As the information is always changing, we can’t be sure it is now accurate.

Introduction

The Blackmore Group was a boutique investment house with a portfolio of products spanning sectors from property, equity and private equity, including listed investments, bonds and funds. The company was managing more than £ 46 million in assets. 

Blackmore Global, a subsidiary investment scheme of a British mini-bond that collapsed with £ 46 million in potential losses, is being investigated for possible use of an illegal collective investment scheme.

Blackmore Global was founded several years before Blackmore Bonds. On the face of it, this is an unregulated investment scheme consisting of a closed company registered in the Isle of Man.

In 2018, the BBC reported that a number of UK pension investors made the mistake of transferring their pension funds to Blackmore Global, an unregulated investment with an inherently high risk. 

Blackmore Bond Plc was formed with the aim of issuing bonds with a fixed interest rate, while the underlying assets are completely property-oriented.

Blackmore Bond plc uses bondholder funds to complete development and investment activities (leveraging the significant expertise of its strategic development partner, Chrome Services Limited) to make these developments profitable and allow bondholders to pay interest at interest rates significantly higher than with more traditional investment opportunities.

Blackmore Bond Plc is a short to medium term investment opportunity that gives eligible private investors the opportunity to invest through Blackmore Bond plc bonds in large scale projects in the UK housing market and thus benefit from the higher interest rates that have historically been the preserve of institutions.

The main characteristics of the Blackmore bonds:

  • Interest rates are significantly higher than bank deposit rates.
  • Income Confidence: The rate is fixed and will not fluctuate depending on market conditions.
  • Security: Investors’ capital is protected by an insurance company with a 5A rating (Dun & Bradstreet highest level).
  • A global independent security trustee has been appointed to oversee security and act on behalf of bondholders to protect investor capital.

Investor return:

Term4 years5 years
Annual interest rate8.9%9.9%
Interest rateFixed rateFixed rate
Interest payment frequencyQuarterly Quarterly

How was the interest calculated?

The minimum investment amount was 5000 pounds, for that the gross annual interest was 9.9%, which is 495 pounds. After 5 years of maintaining your money in the Blackmore bonds you would receive interest and capital rate of about 7475 pounds. 

Or another example on investing 100,000 pounds. The gross annual interest rate was 9.9%, which is 9,900 pounds, and after the 5 year period you would get an interest and capital rate of 149,500 pounds, which is great.

How Safe was Blackmore Bond?

Layered security reduces risk and capital protection is enhanced by a robust security scheme, they said. How do they do that? 

Investors were legally responsible for all land and property assets owned by Blackmore Bond Plc. In some cases, this was a preliminary charge, and where there are loans, it may be behind the loan’s back.

This charge was mitigated and enforced by the International Administration Group (AG), an independent professional appointed to protect the interests of investors. Since the founding of AG in 2000, the Blackmore team has managed over 400 funds. 

In addition, the Company used an approach in which, if land and property are not sufficient to pay the investor. Capital Investors are implementing a capital guarantee scheme that works reliably. pay each investor up to £ 75,000. The policy is managed by ION Insurance Group, established in 2004, ION ow has assets on the balance sheet of 2,125 million.

FAQ before Blackmore collapse

These questions were how somebody promoting Blackmore might have promoted such a scheme.

Question: How safe is my investment? 

Answer: This is what they said – your capital is protected by multi-level protection. Your investment is secured by a legal charge against the assets of the Company. In addition, protection is provided by a capital guarantee scheme, which works like an insurance policy, paying up to £ 75,000 per investor. The Independent Security Manager – International Administrative Team – has been appointed to monitor and oversee security; acts solely in the interests of the Bondholders and not in the interests of the Company.

Question: When will I receive interest? 

Answer: Interest will be paid every three months on the following days: January 31, April 30, July 31 and October 31 (this is a banking day). Interest will accrue from the date your application is accepted. Your first payment will be prorated. 

Question: How do I get interest? 

Answer: Interest will be paid directly to your specified bank account. This should be account under your name. For a four-year term, the interest rate is 8.9%. With a five-year term, the interest rate is 9.9%. 

Question: How is tax administration carried out? 

Answer: The company does not withhold taxes, interest is calculated gross. Responsible for any tax liabilities. Bondholder. The interest paid on the bonds to UK resident bondholders will generally be taxed as income in their hands. Bondholders are encouraged to seek advice regarding their personal tax regulations as these may be different for each bondholder.

Question: Are there any restrictions on the size of investments? 

Answer: Minimum investment of £ 500. There is no upper limit and institutional investors with larger capital amounts are eligible to apply. The bonds are issued in series of £ 20 million. After completing one series, the Company is likely to issue another series of bonds. 

Question: Is this really a fixed rate of return? 

Answer: Interest rates are fixed at 8.9% and 9.9% for this series of bonds. Blackmore reserves the right to adjust the interest rates offered in future bond issues. The likelihood that the interest rates on future bond issues will be lower than the rates currently being offered. Capital is in danger. 

Question: Are there any fees or charges? There are no commissions or fees. Your bank may charge a fee for transferring money. Blackmore Bond Plc bears the costs and fees for professional services for raising capital and property development, this is explained in the Information Memorandum.

What happened to Blackmore Bonds?

Investors who had their funds in this company, which collapsed earlier in 2020, are under a big risk of never getting their funds back after the property portfolio in which millions pound re likely to be equal less than £ 1 million.

Blackmore Bond raised millions of pounds from investors to finance real estate development between 2016 and 2018, but the company came under the control of the administration in April after months of difficult conditions when it failed to pay interest on the bonds.

In June 2020, the Duff & Phelps administration warned that investors could receive no more than £ 5 million from 11 development projects in which their £ 46 million were invested.

But after a string of setbacks since then, administrators have calculated that the funds available from the real estate portfolio are unlikely to exceed £ 1 million.

Along with some administrative and legal fees that are already reaching to more than £ 1 million and investors who hold the bonds qualifying as unsecured creditors, Duff & Phelps notified that there can be a “substantial deficit” in investor funds.

In the distribution of the income of a liquidated company, unsecured creditors rank below secured creditors.

Duff & Phelps warned that property values ​​were impacted by the discovery of substandard construction work, which in some cases required repairs and “significant” increases in interest on loans, often short-term or bridging financing, while the property was being valued. and put up for sale.

When Jeff Bouchet and Benjamin Wiles of Duff & Phelps were appointed co-administrators on April 22, Blackmore Bond had less than £ 1,000 in the bank.

The bondholders have not received quarterly interest payments on the contract since last October, despite assurances from Blackmore directors that cash flow concerns will soon be resolved.

The bonds were advertised with yields ranging from 6.5 to 10 percent, and some were sold as an alternative to Innovative Finance Isa, where the interest paid to bondholders is tax-free, according to administrators.

Blackmore Bond used the same online marketing company that represented the scandalous London Capital & Finance to attract new investor funds.

Administrators said the company was paid a 20% commission and billed directly as soon as bondholders issued funds for the mini-bonds.

London Capital & Finance went into administrative mode last January after raising over £ 237 million from over 11,500 investors over two years.

The directors of Blackmore Bond have previously blamed the collapse of London Capital & Finance and surrounding press coverage for making it increasingly difficult for them to attract new investment in their own schemes.

The company was not regulated by the Financial Conduct Authority.

Latest news: Blackmore Bond Investors Suffer Total Loss

The latest message from the Blackmore Bond administrators shows that investors may face full or near total losses.

Potential gross return has been revised from £ 5 million to less than £ 1 million due to the difficulty of selling real estate / construction sites as a forced seller during the pandemic, as well as the fact that Blackmore borrowed money from expensive short-term lenders whose property security outperforms bondholders.

With administrative and legal costs already in excess of £ 1 million, which is also ahead of regular Blackmore investors in the queue, this means a complete loss for bondholders.

The overall loss perspective stands in stark contrast to Blackmore’s marketing materials, which argued that bonds provide “simple, fixed income with guaranteed returns” and are “fully insured against bankruptcy through our comprehensive capital protection scheme.”

This Capital Protection Scheme consisted of insurance policies issued through Ion and the Northern Surety Company (also known as Northernlights Surety). It is unclear if they will actually bring any kind of compensation to investors. The Administrators note that they are not responsible for the claims as they are in the hands of Blackmore’s Trustee, Oak Fund Services (Guernsey).

Blackmore raised £ 46 million through its unregulated bonds, which were sold to the public by the same marketing company as London Capital and Finance.

FAQ after Blackmore collapse

Question: Why did Blackmore stop paying interest?

Answer: Blackmore defaulted on three quarterly interest payments starting in August. August was eventually paid a week late; Blackmore accused of a typo.

Payments for September and December remain unpaid. Blackmore is now blaming Brexit and delays in real estate sales.

Question: Where are the accounts?

Answer: As a PLC, Blackmore had to file its December 2018 accounts by June 2019. She has used a loophole in the Companies Act twice to extend the deadline, and now appears to have missed it entirely. Companies House reveals that the due date is December 27, which is more than a week ago.

There are two obvious reasons the company did not use the loophole a third time: 1) Blackmore deliberately chose to use the loophole 2) No one at the company cares anymore about filing the paperwork needed to use the loophole.

Question: What does the Financial Conduct Authority do?

Answer: Probably nothing. Or nothing visible to the public, which is no worse in relation to investments previously promoted to the public.

Over the past five years, the FCA has consistently held that unregulated investment is not its problem (despite its statutory goals of maintaining market confidence and consumer protection). Since the departure of Andrew Bailey, he is currently rudderless.

Although the FCA intervened in London Capital and Finance through misleading promotions that were soon followed by the collapse of the scheme, its powers to interfere with Blackmore are more limited as Blackmore is not an FCA-affiliated company.

At the moment, the FCA seems poised to let things take their course.

The UK’s continued failure to pull its securities laws from the 1920s and the FCA to enforce compliance for companies relying on the ‘wealthy / seasoned investor’ exemption to prove their investors are eligible means companies like Blackmore is free to raise money from UK investors without FCA oversight or significant disclosure requirements.

This is not a scandal; there is an element of surprise in scandals. This is the expected and intended consequence of sound regulatory and public policies.

Question: Is it likely that Blackmore investors will get their money back?

Answer: Due to the lack of public information about Blackmore’s finances, it is impossible to tell what will happen from the outside.

Blackmore bonds had a minimum maturity of 3 years and the first capital payments are due in 2020.

Smaller companies can and are recovering from temporary cash flow problems. It is also an inherent risk that a loan to a small company will result in a 100% loss. The fact that the Blackmore loans were advertised as “secured loans” does not change this, as there is an inherent risk that the collateral will not be sufficient to cover the administrator’s fees.

In the long term, Blackmore needs to generate returns of up to 16% per annum after all overheads and costs in order to successfully pay its investors income (the income needed to maintain a 20% advance commission and 7.9% per annum for an investor for three years). The risk of it failing is extremely high.

Question: What can investors do?

Answer: If you lend money to the company, and it stops returning it, there are only two options: 1) Write it off, forget about it and treat any return as an unexpected bonus 2) Consult a lawyer and run a high risk of throwing good money for bad. All other options are more stressful and less productive options 1) and 2).

Investors who have been advised by an FCA-regulated financial advisor to invest in Blackmore, or who have used the services of an FCA-regulated SIPP, can resort to the Financial Ombudsman and Financial Services Compensation Scheme.

If investors are unexpectedly contacted by people claiming they want to buy their investment in Blackmore, it is likely a scam.

Question: Why is the media so interesting?

Answer: Some small and unknown business (between, Blackmore raised its debt over £ 25 million), trying to pay its debts on time will usually have the “dog bite” story, which is very alike any other who borrowed or lent money for a small business loan.

However, Blackmore has generated media interest due to unfortunate parallels between it and London Capital Finance. Both companies paid a commission of c. 20% in Surge Financial. After LCF was closed by the FCA, Blackmore briefly replaced LCF on comparison sites owned by the Surge group of companies.

Blackmore is only suitable for wealthy and savvy investors who can swallow the inherent risks associated with lending their money and for whom it makes sense to lend a small portion of their money. over-the-counter small businesses. 

It is clear from Blackmore’s downgrading Trustpilot rating that a significant number of Blackmore investors were not really psychologically prepared for the imminent risk of default.

This is not surprising given that Blackmore used the same marketing channels as LCF, which has also been promoted to inexperienced investors.

Question: What does this mean for Blackmore’s attempt to raise money outside the UK?

Answer: In April 2019, Blackmore briefly closed for new business. When it reopened, it stopped accepting money from the UK. There is no legal prohibition on accepting investments from UK investors (although there are restrictions on the promotion of unregulated bonds).

In May, Blackmore opened an office in Dubai with plans to open new offices in Hong Kong and Tokyo.

The Emirates, Hong Kong and Japan have one thing in common; they don’t use the Latin alphabet, which means investors from those countries who search for Blackmore on Google are less likely to see negative ads in the UK.

How much investment Blackmore received from outside the UK is unknown, in part because he did not submit invoices on time.

Some cons of investing in bonds 

Investing is very serious step in the world of business, and before making an investment you should study everything about the company you are going to work with. Below are some of the cons that every investor should be aware of:

  • A bond is an instrument that a bond issuer owes to its holders. This is a debt security for which the issuer is indebted to the holders and, depending on the terms of the bond, is obliged to pay interest to them and, possibly, pay the principal amount at a later date, which is called the maturity date.
  • Fixed rate bonds are subject to interest rate risk, which means that their market price will decline in value when the usually prevailing interest rates rise.
  • Bonds are also subject to various other risks such as callback and early redemption risk, credit risk, reinvestment risk, liquidity risk, event risk, exchange rate risk, volatility risk, inflation risk, sovereign risk and yield curve risk.
  • A company’s bondholders could lose most or all of their money if the company goes bankrupt. There is no guarantee how much money will be left to pay the bondholders.
  • Some bonds are subject to callback. This creates the risk of reinvestment, that is, the investor is forced to look for a new place for his money. As a consequence, the investor may not be able to find such a good deal, especially as this usually happens when interest rates fall.

The Blackmore bonds example can show you that in every moment the company you are working with can just stop paying you your interest rate and just collapse. That is why, you have to know everything and be enough experienced to create valuable strategies and follow them. 

Pained by financial indecision? Want to invest with Adam?

Financial Planner - Adam Fayed

Adam is an internationally recognised author on financial matters, with over 279.2 million answers views on Quora.com and a widely sold book on Amazon

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