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Court gives go ahead for vote on £230m Woodford redress scheme

Court gives go ahead for vote on £230m Woodford redress scheme
Paloma Kubiak
Written By:
Paloma Kubiak

The High Court has granted permission for a vote to take place giving Woodford investors the chance to approve a £230m settlement scheme, four years after the fund’s suspension.

Justices at the hearing which concluded today gave the green light to the scheme of arrangement (a procedure to settle claims) and voting.

This follows the request by Link Fund Solutions Limited (LFSL) for permission to call a meeting of scheme creditors allowing them to vote on the proposed settlement.

Now that the High Court has granted permission for a vote to take place for the potential £230m redress scheme, for it to be implemented, it requires approval from a majority of scheme creditors. This is defined as 50% of creditors representing 75% or more in value.

YourMoney.com understands the voting is expected to start on 20 October with Link due to publish terms of the settlement offer at that time.

Investors will then have until 4 December to complete the forms needed to vote on the scheme.

A creditors meeting is expected to take place on 13 December with the outcome of the vote expected by 15 December.

A sanction hearing has been scheduled on 18 January 2024 where the court will then decide whether to approve the scheme.

If the majority vote and the court approves the scheme, Link will then confirm when payments will be made.

Woodford redress scheme

It’s been a long journey for trapped Woodford investors after former star manager Neil Woodford was forced to suspend his flagship fund – Woodford Equity Income Fund – on 3 June 2019 as he couldn’t meet a surge in redemption requests following a period of poor performance.

In October 2019, the fund’s administrators confirmed the £3bn fund would be wound-up with cash returned to investors “as soon as possible”.

To date, £2.56bn has already been distributed from the £3.6bn value of the fund.

Regulator, the Financial Conduct Authority, MPs and legal firms have all been involved to bring an end to this long-running saga.

In order for a vote on the £230m settlement scheme to be given the green light, there have been major obstacles to overcome.

One included the sale of Link Group’s Fund Solution business to asset management service firm Waystone Group, with this acquisition completing earlier this week.

The other was permission from the High Court for the vote to go ahead.

Now, one final hurdle is for a majority of scheme creditors to vote in favour of the £230m settlement scheme, which includes a voluntary contribution of up to £60m from LFSL ultimate parent Link Administration Holdings Limited. There’s also a voluntary contribution of up to £2.5m towards the costs of implementing the redress scheme, if it gets the go ahead. Then the court needs to give the scheme the green light.

First distribution from settlement fund could be in Q1 2024

Based on previous timescales published, investors were told they could see a first distribution from the settlement fund of between £180m and £200m in Q1 2024. “Additional payments are also expected to be made as soon as possible”, Link added in its last update in September.

If the scheme is approved it will be legally binding and means “in return for the payments made from the settlement fund, scheme creditors will no longer be able to make any claim against LFSL, the parent and other related parties relating to the WEIF” (Woodford Equity Income Fund).

If the scheme doesn’t go ahead, Link suggested the likely outcome is “many years of litigation”, and if it successfully challenges claims, it may not be required to pay anything to investors.

Law firms Harcus Parker, Leigh Day and RGL Group have previously filed group action claims against an investment platform and the management firms on behalf of thousands of investors in the defunct WEIF.