The Manchester-based real estate investor, which raised £45m by issuing high-interest ‘minibonds’ to finance residential developments, has been placed into administration after unravelling in recent months.
Administrators at Duff & Phelps have been appointed to the company, which cited a “challenging trading period” as the cause of its collapse.
Patrick McCreesh and Phillip Nunn, former joint chief executives of Blackmore Bonds, said in a statement: “We can confirm that Blackmore Bonds has been placed in administration.
“While we have suffered a very challenging trading period due to a range of external factors impacting on the property market, we remained confident that a solution could be found, and were working tirelessly to secure additional funding.
“Short-term solutions had been obtained, which would have enabled us to continue to trade, but these were, unfortunately, not approved by the security trustee, and they took the decision to place the business into administration.
“We would like to apologise to all bondholders and will give our wholehearted support to the administrators to achieve maximum return for everyone affected.”
Duff & Phelps said it would immediately begin an investigation into the company’s financial records and its investments.
Blackmore was founded in Manchester in 2016 and began issuing minibonds to retail investors with a minimum £5,000 investment.
Minibonds are a form of debt that allow investors to invest in a company and receive a fixed return over a specified time period, with the initial investment returned at the end of that period. An illiquid investment, they are essentially ‘IOUs’ that companies sell on to investors.
The money Blackmore raised was held in wholly owned special purpose vehicles invested in a portfolio of property development projects, with the total value of bonds standing at around £45m, according to the administrators.
Among Blackmore’s investments in the North West were the conversion of St Augustine’s Church in Cheadle Heath into nine apartments, and the construction of 54 homes on the banks of Alston Reservoir at Longridge near Preston.
In 2017, the company entered into a joint venture with luxury housebuilder Lusso Homes to build a series of projects including the eight-home The Park development in Ealing, West London.
A similar business model was used by the now-defunct London Capital & Finance, which went into administration in January 2019 leaving a reported 11,400 investors facing total losses of £230m as a result.
The London Capital & Finance minibonds were marketed and distributed by the same company that marketed Blackmore bonds – the Brighton-based Surge Group founded by Paul Careless.
In Blackmore’s case, bondholders have not received their contractual quarterly coupon payment since October 2019, despite assurances from the directors this year that the situation would be resolved, according to Duff & Phelps.
Blackmore has also failed to file its company accounts for the financial year 2018, which were overdue in December.
A representative bondholder this year issued a winding up petition against the company, resulting in administrators being appointed.
Geoff Bouchier, joint administrator at Duff & Phelps, said: “There has been concern regarding the company’s affairs for several months so it will be a relief for bondholders that independent professionals have now been appointed to the company.
“We are immediately undertaking a review of the properties and will immediately commence an investigation into the company financial position.”
Blackmore appointed McCreesh as company secretary in December, following the termination of Claire Malley who previously held the position.