The demise of the New Earth Solutions (NES) group of companies has continued with the appointment of liquidators for its investment funds and an expectation that backers are unlikely to get their money back.
The move was agreed at a hearing of the High Court on the Isle of Man on 9 June. Two staff from Deloitte, Alex Adam and Sarah Sanders, have been appointed joint liquidators for three parts of the NES group:
- New Earth Recycling and Renewables (Infrastructure) – NERR
- Eclipse Investment Fund – Eclipse
- Premier Investment Opportunities Fund – PIOF
This follows an agreement on 7 June when two other parts of the group, New Earth Solutions Group (NESG) and New Earth Solutions Facilities Management (NESFM), were placed in administration.
These two were sold two days later to DM Opco in a move which administrators Duff & Phelps said safeguarded 143 jobs across NESG’s five operating sites and the head office in Verwood, Dorset. None of the operating sites was said to be affected by the change, and they are still processing local authority waste.
A letter from Adam to shareholders of NERR, Eclipse and PIOF said the recovery of any investments was dependent on the ability of NESFM and NESG “to generate profits and in particular cash flows from their assets and operations”.
“We understand, based on limited information provided to us to date, that NESFM and NESG also owe money to other lenders who hold security over the assets of NESFM and NESG in priority to NERR. As a result, the repayment of loans made by NERR and distributions to it as a NERR shareholder would only occur after these, more senior, lenders are repaid in full.”
Adam added that “substantial recovery of value from these investments appears unlikely”. A winding-up petition in the court has been set for 12 July.
A director of PIOF, Michael Richardson, has written to shareholders to confirm that it is unlikely the sale to DM Opco will generate any return for investors.
“This will come as extremely disappointing news to everybody connected with the fund, including the directors, who believe they have made every effort to negotiate the best solution for shareholders,” he said.
A briefing page on the Isle of Man Financial Services Authority website sets out the background, and notes that the companies being liquidated are unregulated by the island’s authorities.
“NERR is an Isle of Man Specialist Fund. PIOF is an Isle of Man Qualifying-Type Experienced Investor Fund investing into NERR. Eclipse is an Isle of Man Qualifying Fund investing into NERR.
“[These] are unregulated collective investment schemes which are not approved or reviewed by the authority and are post-notified to the authority for the purpose of registration. These types of funds cannot be sold to the retail public.”
The authority says access to such funds is available only to investors who meet minimum entry criteria and understand the risks involved.