Investors in Fortress Capital Partners have approved an insolvency deal which allows a vehicle linked to the alleged “architect of the company’s failure” to revive the business.
A majority, more than the requisite 75 per cent voting by value, voted for the proposed five-year company voluntary arrangement (CVA), despite Fortress’s administrators having described it as “highly speculative”.
In the latest report from administrators at Begbies Traynor to creditors, expected to be their last, they said that an initial £350,000 payment had been made by Lend Corp Ltd, the vehicle behind the CVA, to facilitate the arrangement.
• Administrators’ warning over Fortress insolvency move
The CVA, the second put to creditors after the first was voted down in April, was approved in July following a bitter battle among creditors behind the scenes to sway the vote.
Fortress was an investment scheme whose backers included several celebrities as well as members of a southeast London church. It promoted returns of up to 18 per cent a year, before collapsing in September 2023.
Its failure has triggered an investigation by the Metropolitan Police and led to an extraordinary dispute between administrators and the Fortress creditors’ committee. Begbies has claimed Fortress has “all the hallmarks of a Ponzi scheme”.
Borrowers included Kevin Maxwell, son of the late media baron Robert Maxwell and brother of Ghislaine Maxwell, and celebrity investors including Scott McTominay, the Napoli and Scotland footballer.
Kevin Maxwell, the son of the late media baron Robert Maxwell and brother of Ghislaine Maxwell
LEV RADIN/ANADOLU AGENCY/GETTY IMAGES
In total, unsecured creditors have been left with a deficit of £19.5 million, mostly owed to investors, the administrators have previously stated.
Their latest report claims Maxwell, 66, has breached the repayment terms of a two-year £1.25 million settlement. They said payments had been sporadic because of delays selling overseas property and that a statutory demand was served on August 12 “in respect of the settlement arrears … of £597,000”.
Maxwell, who became Britain’s biggest bankrupt in 1992, had been warned of the risk of being pursued for bankruptcy for a second time if he failed to repay the debt. It is now for the supervisor of the CVA, Kirker & Co, to pursue the debt. Maxwell was approached for comment.
The sole director of Lend Corp, incorporated at about the time Fortress entered administration, is Mario Falcone, who made his name in the television series The Only Way is Essex.
Falcone, 37, was previously listed as Fortress’s head of business development and is listed as being owed £450,000 by Fortress. He voted in favour of the CVA.
In a report to creditors ahead of July’s vote, administrators said Lend Corp has been set up to “operate in a similar way” as Fortress and will be “utilising the services” of Ashley Reading, Fortress’s former chief executive who was made bankrupt in 2010.
Lend Corp has committed to pay 50 per cent of the net profits into the CVA over five years, including the £350,000 payment it has now made.
In return, Lend Corp agreed to acquire Fortress’s assets, including an overdrawn directors’ loan account of Reading, as well as for his daughter Cameron Reading, a model, Fortress’s former head of investor relations and the girlfriend of McTominay. It also includes any interest in a luxury Kent home contentiously occupied by Reading’s family, as well as other debtors to Fortress.
Cameron Reading is a model and the girlfriend of Scott McTominay
BRADLEY COLLYER/PA
Administrators said ahead of the CVA vote that the proposal was “highly speculative” and “there may be little further return”.
Commenting on the vote, Ashley Reading, 56, said: “Creditors have backed me, have backed Fortress, and the company has come through the process in a positive way. I’m genuinely proud the CVA received overwhelming support and now offers real clarity and value for those involved.
• The extraordinary downfall of Fortress Capital Partners
“For me, it’s less about vindication and more about trust, that investors recognised the substance behind the business and backed a constructive path forward.”
He has previously said that “all funds raised by Fortress complied with correct processes”.
One investor opposed to the CVA, speaking anonymously, said: “Our hope was that more creditors might wake up to the fact it’s been an [alleged] Ponzi scheme.” They added they hoped the authorities would fully investigate.
A spokesman for the Met said: “We can confirm that officers from the Met’s economic crime team are investigating allegations of fraud made to police on 10 November, 2023 following a referral from Action Fraud. There have been no arrests. Enquiries are ongoing.”