A disgruntled creditor of the failed peer-to-peer lending firm FundingSecure has launched a high court claim alleging its £500k investment was misappropriated and should be returned.
Last year this site exclusively reported on retail lenders who were raising money for legal advice after being faced with the prospect of being joined to this claim.
Read ‘FCA silent on client account cash grab‘ for a background to FundingSecure and why a large hole was said to have existed in the client account.
Since then the mouseinthecourt reported on investors anger as the FCA closed their investigation into the firm — with no public action taken.
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Reporting by Daniel Cloake
This is a complicated and nuanced claim which makes it difficult for this humble blogger to adequately summarise. In the interests of open justice we are therefore publishing the underlying court documents which contain full details of the claim. These are available at the end of the page.
In short however:
The claimant, JC Starr Holdings Limited, is a British Virgin Islands registered company.
Their barrister Timothy Collingwood KC, in a written particulars of claim states:
In April 2019 they provided £500,000 to FundingSecure for the purpose of underwriting loans. This was to allow FundingSecure to temporarily fund its peer-to-peer loans while waiting for retail investors to collectively contribute the total amount.
It is said this replaced an agreement that had previously been carried out personally by Spencer John Coite Tarring, 41, who acted on behalf of the BVI registered company.
The mouseinthecourt notes that Spencer Tarring is also a member of the FundingSecure creditors committee.
It’s claimed that the administrators of FundingSecure confirmed via their solicitors that the £500k was used “to repay losses created by the historic misapplication of client account monies” and “to meet operational costs“.
It’s therefore claimed that the £500k was not used for purpose under which it was provided and should be returned.
As we reported last year, a draft particulars of claim was made available to affected FundingSecure customers, at a stage where it was envisaged they would be joined as parties to the claim.
We’re told that “some 50 investors have asserted claims competing with the Claimant’s” although “many of the various individuals intimating claims in correspondence to Boodle Hatfield have refused to provide the nature, legal basis or quantum of their respective claims.“
The claimant asks the court to return the £500k to them, along with “any further necessary declarations, accounts, inquiries, directions and/or other relief“.
In a written response to the claim by barrister Jon Colclough, on behalf of FundingSecure Ltd (in administration), we’re told that they “will take a neutral position on the claim advanced by the Claimant“.
It’s said FundingSecure’s role in these proceedings should be limited to the following:
1. Filing a defence requiring the Claimant to prove its case (i.e. this document).
2. Providing information to the court and the parties about the use of the client account in order to assist the court in determining beneficial ownership.
3. Alerting investors to the existence of these proceedings to ensure that any other person with a claim to some or all of the money previously held in the Account is able to engage with these proceedings if so advised.
We’re told that FundingSecure “does not admit or deny the Claimant’s claim as set out in the particulars of claim; and requires the Claimant to prove the same“
“Innocent investors”
FundingSecure “admits that, assuming the Claimant has a valid proprietary claim, the Claimant’s fund were mixed with other funds held under trust for the benefit of innocent Investors and there are evidential uncertainties as to the application of the various monies in the mixed fund.“
The defence concludes with an invitation that the court should “make such order as it thinks just and fair in light of the competing claims to the remaining funds“
This site will keep a close eye on events going forward.
Case Files
06/09/2023 – Claim form issued
06/09/2023 – Particulars of claim filed
16/10/2023 – Filing of defence deadline extended
09/11/2023 – Defence statement filed
JC STARR HOLDINGS LIMITED – Claimant
-v-
FUNDINGSECURE LIMITED (in administration) – Defendant
Case number: BL-2023-000078
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