The liquidation of Louis Group IoM is finally close to completion after the Isle of Man High Court ordered that it be wound up in 2013, as it was unable to pay its debts.
A subsidiary of South Africa’s House of Louis, Louis Group IoM has a cash balance of just £70,000 and outstanding creditor claims in excess of £40m ($52.5m, €44.7m).
Liquidators Mike Simpson and Gordon Wilson say creditors’ claims are “to all intents worthless given the financial situation”.
A final distribution is due to be made to creditors but Simpson and Wilson have admitted that losses have been significant and the experience of investors has been ’”financially devastating”.
They took the decision not to pursue the parent company or Alan Louis on the basis that legal action would not be commercially viable or in the investors’ interests.
They noted, however, the “pivotal” role Alan Louis played in the collapse and highlighted that he “seemingly personally benefitted from the transfer of millions of pounds of investor sourced funds to his own personal accounts”.
The collapse saw 700 investors lose at least £60m, most of whom were from the island, the UK and South Africa.
Accountancy firm PwC, which was appointed joint liquidators in January 2013, wrote in its August 2014 report that there was a “taint of illegality” across the majority of the business carried out by the group on the Isle of Man.
Two directors have already received bans, with High Court proceedings still taking place against five other directors, including Alan Louis.
Reported to the authorities
IoM Today reports that Simpson and Wilson said: “We have also reported our findings to appropriate authorities and it is for them to decide on actions that might be necessary to protect the investing public going forward as well as hold Alan Louis, and any others, accountable.”
The Louis Group IoM collapse is being investigated by the island’s financial crime unit.
“Our job was to make a commercial assessment of possible causes of action and their potential to financially benefit investors if pursued.
“In that regard, having discussed the situation with our legal counsel, we decided that there were too many unknowns to justify further expense, not least whether Alan Louis would have the assets required to satisfy any judgment that might have been obtained against him.”
A final scheme of arrangement to bring the liquidation to an orderly end has been put forward by the liquidators.
Simpson and Wilson said: “We believe that the final proposed scheme will clear the path towards this whole matter being brought to an end during 2017.
“Whilst we fully acknowledge investor losses in Louis Group have been significant, we hope the distributions we have now made will help investors achieve a degree of closure and all affected can now move on from what has been for many a financially devastating experience.”