On 31 October 2018, the Financial Conduct Authority (FCA) successfully petitioned the High Court for Total Debt Relief Limited (TDR) to be wound-up in the public interest. There was no challenge to the petition by the sole director of TDR nor by its Company Secretary who was also the sole shareholder. The FCA has subsequently launched an investigation into the activities of the firm.
TDR was a debt management company which operated a full and final settlement model, holding funds on behalf of its clients who were having trouble meeting their debts. The model typically saw the client make regular payments to TDR which, in turn, made a minimum or nominal payment to the creditor. The remaining balance of the payments from the client was held by TDR to create an accumulated fund over time which was then used to settle the debt with the creditor for a reduced amount.
Stephen Hunt, a partner of Griffins, was appointed as liquidator of TDR by the Secretary of State on 7 November 2018. He was previously appointed provisional liquidator of TDR by the High Court when the FCA made an urgent application to the Court on 11 September 2018.
Prior to Mr Hunt’s appointment as provisional liquidator, the FCA had already taken a number of urgent steps to investigate what had become of the client monies of TDR and to secure it to prevent further dissipation. Building on that work, on appointment Mr Hunt took legal action to freeze bank accounts in the UK and USA to secure and preserve TDR’s assets for the benefit of its creditors and clients. Upon his appointment as Liquidator that action continues and is now focussed overseas where the majority of TDR funds were moved before 11 September 2018.
Through his investigations the Liquidator has now identified that monies belonging to a client base of over 450 clients amounting to about £1,500,000 was required to be held in a separate client accounts. These investigations suggest that these funds had been taken from the accounts over several months and appears to have been paid to entities controlled by TDR’s remaining officers in the USA. At the end of August 2018 these individuals attended the offices of TDR in the UK and dismissed all the staff. The only UK based director had resigned earlier in August contributing to the concerns of the FCA that TDR did not have a UK resident director. All of the bank accounts were then effectively emptied and the balances eventually remitted to accounts in the USA. The assets of these individuals are now the subject of worldwide freezing orders. They have to date failed to provide company records that would facilitate the reconciliation of the client funds against the bank accounts and the money misappropriated as above.
The objective of the Liquidator is to recover the maximum available.