Lavelle Partners been instructed in many cases relating to the miss-selling of financial products through intermediaries.
Financial intermediaries have a duty to ensure that financial products are properly constructed and sold to the appropriate client in the appropriate manner. Where an intermediary fails in that duty in a way that has a negative impact on your financial interests, you may have grounds for a professional negligence claim.
We are the leading Irish firm in the area of investment disputes and we have built up an extensive network of the best independent experts to advise on a wide range of investments.
March 2021: Irish Investors face losses from unregulated investment in the German Property Group (formerly Dolphin Trust) and MUT 103 limited (In Liquidation)
Over 1,800 Irish investors have been caught up in the collapse of the German Property Group (“GPG”), formerly known as Dolphin Trust.
GPG had raised €107 million from Irish investors by way of issuing loan notes, an unregulated product, for the purpose of buying and renovating listed buildings in Germany, with promises of annual returns of as much as 15%. In late 2019, there were signs of defaults on interest payments on the Irish notes.
Wealth Options Trustees Limited (“WOTL”), an Irish registered Company based in Kildare, acted as administrator and distributor in Ireland for the loan notes, which were sold to investors through a network of 144 brokers. WOTL is the administrator of two Irish special purpose vehicles, MUT103 Limited and Dolphin MUT116 Limited, which are linked to certain investment property securities.
By Order of Mr Justice O’Moore of the High Court dated 10 March 2021, Myles Kirby was appointed the Official Liquidator of MUT103. Mr Kirby has advised Irish investors that he has been gathering information on MUT103 and its investments in GPG, which entered into a formal insolvency arrangement in Germany in 2020. He has advised investors that based on his work to-date, the current values of the German Property assets are a fraction of the total investment and it remains to be seen what funds, if any, will be available to distribute to the investors.
Investors have no recourse to the Central Bank-run Investor Compensation Scheme as these loan notes are not regulated products. Investors could have potential recourse against their brokers if there was any negligence or mis-selling involved. Lavelle Partners are currently advising certain investors in respect of these matters.
May 2021: High Court appoints provisional liquidators to another Irish company linked to German Property Group (Formerly Dolphin Trust)
In March we reported that over 1,800 Irish investors have been caught up in the collapse of the German Property Group (“GPG”), formerly known as Dolphin Trust.
Last week the High Court appointed joint provisional liquidators to another Irish company linked to the collapsed GPG.
Mr Justice Senan Allen heard last Wednesday evening that the application to appoint provisional liquidators to Dolphin MUT 116 Ltd, with registered offices in Naas, Co Kildare, was being moved for reasons including the High Court having last month granted a petition to wind up another Irish company in the GPG, MUT 103 Ltd.
On Wednesday, Counsel for MUT 116, told Mr Justice Allen it has extensive liabilities and a significant number of creditors, many of whom, although represented by brokers, are retail investors.
Its liabilities to loan note holders to date amount to some €36 million while another €63 million will fall due over the lifetime of loan note instruments to 2024.
The company’s only asset is €10,500. While documents placed a face value of some €177 million on security held by the MUTs in German property assets, a “note of caution” has been sounded on the ability to recover under the security in light of ongoing fraud investigations and the applicable insolvency law in Germany, the petition stated.
The insolvency administrator has indicated he considers the Irish loan claims to be subordinated with the effect the security may be challenged.
According to Counsel, the directors of MUT 116 are of the view it is appropriate to appoint provisional liquidators to continue engagement with creditors and with the insolvency administrator in order to get the best outcome possible for creditors.
Based on the evidence, Mr Justice Allen appointed Ian Barrett and Shane McCarthy of KPMG as joint provisional liquidators pending the hearing of the winding up petition on 14 June 2021.
The loan notes issued to Irish investors are an unregulated product and are thus not covered by the Central Bank-run Investor Compensation Scheme leaving little recourse to Irish retail investors. Investors could have potential recourse against their brokers if there was any negligence or mis-selling involved. Lavelle Partners are currently advising certain investors in respect of these matters.
The Irish Times, 1st June 2021: Partner Ciarán Leavy comments on the risks around loan notes and the Dolphin Trust case.
If you believe that you have been miss-sold a financial product, please contact Partner and specialist in professional negligence claims against financial advisors and investment disputes, Ciarán Leavy, at 01 644 5800 or [email protected].