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Three UK law firms have teamed up to take action against an insurance broker, in order to compensate investors after the high-profile collapse of mini-bond provider Blackmore Bond in 2020.
Manchester-based Barings Law, London firm Humphries Kerstetter, and Edinburgh-based MBM are launching a professional negligence class action against Lonsdale Insurance Brokers.
The three law firms will be acting on behalf of series one bondholders of Blackmore, whose investments collectively total around £18.7m.
Blackmore was set up in 2016 and raised money to fund residential property development by issuing minibonds to investors, promising interest rates of up to approximately 10 per cent.
The bonds included a capital guarantee scheme held with ION Insurance, brokered by Lonsdale. It is alleged that Lonsdale acted negligently in its role as broker by appointing an unsuitable insurer and missing red flags.
According to a parliamentary report, Blackmore Bond built 11 separate developments in total, using £46m from around 2,800 investors.
Blackmore stopped making payments to bondholders in late 2019 and by April 2020 it had gone into administration resulting in significant losses for investors.
Barings Law and Humphries Kerstetter have more than 400 clients who invested as series one bondholders. But the firms believe there will be others affected and are looking to sign up more bondholders to join the action.
“We are thrilled to be working alongside Humphries Kerstetter and MBM Commercial to help bring justice to the series one bondholders who put their trust in Blackmore Bond,” said Craig Cooper, managing director of Barings Law.
“A lot of hardworking people have lost money that they need to be able to care for elderly relatives, pension funds, school fees or their life savings. We are hopeful that alongside these two great law firms, we will be able to help these people recover the money that was lost when the company was liquidated.”
Humphries Kerstetter partner James Russell added: “These people have suffered significant losses following Blackmore’s collapse with little hope of recovery to date, despite being told their investments were guaranteed.
“Our firms are committed to access to justice and have formulated an innovative strategy to seek redress for the bondholders and it is hoped that a positive outcome can be achieved.”
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