Investors trapped in the Woodford Equity Income fund are likely to receive a payment from the fund’s administrator in the first quarter of 2024, the fund’s administrator Link Fund Solutions has revealed.
As previously announced, Link has agreed to a scheme of arrangement whereby it will compensate investors in the fund.
The pot of money available from Link comes to £230mn and the first tranche of the settlement will be between £180mn and £200mn paid in the first quarter of 2024.
Link has set aside a reserve from the distribution to cover certain cost contingencies. This means payments will be made to investors earlier than expected.
The reserve amount has been set at £50mn but will be reviewed on a regular basis by Link and the supervisors of the scheme. More distributions will be made to investors if the cost contingencies are released.
A number of law firms are pondering legal cases against Link, which agreed to create a £230mn fund to compensate investors without accepting liability.
A representative of Link said: “As previously stated, the FCA and Link believe that the terms of the settlement with the FCA, if it becomes unconditional, will materially enhance the amount of redress available to investors from Link, in comparison to the position had no settlement been reached.
"Link believes the scheme offers the best available outcome for investors as the scheme provides for the maximum amount possible to be paid from Link with the likelihood of payment sooner than would otherwise be the case.
"Through the scheme, Link wishes to settle any claims that investors may have against it for its role as authorised corporate director of Woodford Equity Income fund.”
The Woodford Equity Income fund, which at its peak was more than £10bn in size, was suspended on in June 2019 after struggling with outflows due to the fund's investments in illiquid assets.
The settlement is contingent on the sale of Link Fund Solutions to Dublin-based Waystone Group, and to more than 50 per cent of investors by number, and 75 per cent by asset value, accepting the settlement.
The redress payment is made up of Link Fund Solution's assets plus part of the proceeds from the sale to Waystone.
Link Group, Link Fund Solution's parent company, will also voluntarily contribute up to £2.5mn towards the costs of implementing the Scheme.
david.thorpe@ft.com
