Crowdstacker project involved in landmark court ruling

A landmark court ruling has backed a restructuring plan for a collapsed company that had received funding from Crowdstacker investors.

Amicus Finance, which raised a total of £15,368,280 from Crowdstacker investors between 2015 and 2017, fell into administration in 2019.

Companies House documents show that £4.1m was owed to Crowdstacker investors at the time of the administration.

Its administrator Begbies Traynor had previously proposed letting the company go into liquidation or be dissolved. However, it proposed a new plan earlier this year to creditors, including peer-to-peer lender Crowdstacker, that would effectively rescue Amicus as a “going concern.”

The administrator said the new proposal was needed as the pandemic and Brexit had made it harder to recover funds.

This was opposed by Crowdstacker but Begbies Traynor used rules under the Corporate Insolvency and Governance Act for the first time, that allow a restructuring plan to be passed without majority approval as long as those owed money are not worse off than they would be the original plan.

Read more: Crowdstacker reviews lending strategy as losses shrink

Under the new plan, Begbies Traynor would still be in charge of distributing money but the company would no longer be in administration, effectively giving it more time.

The High Court in London backed the proposals this week after several hearings.

“This ruling demonstrates how useful restructuring plan exits can be where administrators are working through intensive long tail collection processes, particularly in the financial services sector,” said
Serena McAllister, of Pinsent Masons, which represented Begbies Traynor.

“The decision also importantly sets the path for more restructuring plans to be sanctioned in the mid-market and shows that despite initial reservations within the restructuring community that they can actually be obtained cost effectively even when fully opposed.”