Buy2LetCars drops into administration
A statement on the firm’s website confirms that Graham Bushby and Matt Haw of RSM Restructuring Advisory have been appointed as joint administrators of both Buy2LetCars and its parent company Raedex Consortium, but warned that it is too early to say how much will be returned to investors or when payments will be made.
It added: “The Joint Administrators are evaluating the company’s current financial position and options with the aim of achieving a better result for creditors as a whole than would be likely if the company were wound up without first being in administration.”
Putting on the brakes
The business took money from investors, and used that cash to fund new cars which were leased to drivers with poor credit through another brand, Wheels4Sure. Investors were promised bumper returns of up to 11% for a three-year investment of a minimum of £7,000. They would then receive payments back each month to cover the capital invested, with a final interest payment at the end of the investment term.
Back in February the Financial Conduct Authority (FCA), the regulator, imposed a host of restrictions on Raedex due to “concerns about its finances”. These included preventing the firm from issuing new leases.
At this point the regulator cautioned investors who wanted to put their money into hire cars that they should not do so through Buy2LetCars, as the money could no longer be invested in cars which would then be leased out.
What happens next?
The administrators will now be contacting creditors ‒ including investors ‒ to highlight their appointment, and within eight weeks will publish proposals for how to manage the administration. A website portal will also be set up from which creditors will be able to download these proposals.
The administrators also highlighted that the FCA has made the Financial Services Compensation Scheme (FSCS) aware of the situation. The FSCS is a safety net which can protect customers when firms go bust, but not all firms and products qualify for the cover.
The statement continued: “Ultimately, any decision on compensation is a matter for the FSCS. The FSCS will publish contact details for the company’s investors shortly.”
The administrators also warned investors to be on their guard against scammers potentially posing either as representatives of Buy2LetCars or the administrators.