Investors in the failed Woodford Equity Income Fund are expected to receive the first distribution payment in early April as the scheme of arrangement is effective from today.
Investors have waited over four years to get to this point. Today at 9am, the scheme of arrangement became fully effective, meaning it is now binding on Link Fund Solutions Limited and all scheme creditors.
It is anticipated that payment will be made to registered shareholders in the former LF Woodford Equity Income Fund (WEIF), now the LF Equity Income Fund, in early April this year, but could take longer for scheme creditors who were invested through intermediaries.
Payments will be made in the same way as previous capital distributions, with investors told there’s no need for them to take any action.
Under the scheme, which was sanctioned by the High Court last month, the settlement fund will be paid to the WEIF, which will then make payments to each of its direct shareholders proportionately based on the number and class of shares held. Direct shareholders – including investment platforms – will then pass on the payments to scheme creditors. At the court hearing, Mr Justice Richards ruled an initial £183.5m payment will be made, out of a total £230m settlement fund.
Remember, this payment will be distributed to creditors whether they voted or not for the scheme.
A spokesperson for LFSL said: “We are pleased the scheme has now become effective, following the approval by the Court and the overwhelming support of scheme creditors. We have always believed the scheme was the best option to provide investors with a substantial level of redress, with certainty of payment in the near future.
“We would like to once again thank all investors who took the time to vote on the scheme and make their voices heard. Our focus is now on ensuring payments reach scheme creditors as soon as possible.”
Four-year journey for failed investors
Former star fund manager Neil Woodford’s flagship £3.6bn fund was suspended on 3 June 2019 after a surge in redemption requests that couldn’t be readily met following a period of poor performance.
In October 2019, the fund’s administrators confirmed the fund would be wound up, with cash expected to be returned to investors “as soon as possible”.
But, a number of requirements have had to be met, including the sale of Link Group’s Fund Solutions’ business to the Waystone Group, which completed in October 2023.
For the scheme to stand a chance of being approved, it required the support of a majority in number, representing at least 75% in value.
Indeed, the votes garnered smashed through the necessary threshold, with 93.7% voting in favour of the redress scheme, representing 96.1% in value.
The scheme was then sanctioned by the High Court.
To date, £2.56bn has already been distributed to investors. LFSL said it will provide further updates in respect to payments on the LF Equity Income Fund settlement scheme page.
