The collapse of Fortress Capital Partners triggers insolvency disputes

Administrators have described a second insolvency proposal aimed at taking control of the collapsed investment firm Fortress Capital Partners as “highly speculative”. The proposal, floated by a company named Lend Corp Limited, seeks to implement a five-year company voluntary arrangement (CVA) to generate returns for creditors. This follows a failed attempt by Lend Corp to secure backing for a similar plan just two months ago.

Fortress Capital Partners, which collapsed in September 2023, left unsecured creditors with a deficit of £19.5 million, the majority of which is owed to private investors. The investment firm, promoted as delivering returns of up to 18 per cent annually, has since been labelled by administrators Begbies Traynor as having all the characteristics of a Ponzi scheme. The collapse of Fortress is also being investigated by the Metropolitan Police, though no arrests have been made so far.

The latest CVA proposal seeks to utilise the services of Fortress’s former chief executive, Ashley Reading, despite his financial history, including a bankruptcy in 2010. Lend Corp, which was formed around the same time Fortress entered administration, is led by Mario Falcone, who was previously listed as head of business development at Fortress and is himself owed £450,000 by the firm. The CVA would involve Lend Corp paying 50 per cent of net profits over five years, including an upfront contribution of £350,000, in exchange for the acquisition of Fortress’s assets. These include overdrawn directors’ loan accounts, an interest in a high-end property in Kent, and debts owed by figures such as Kevin Maxwell and others linked to Fortress’s collapse.

Begbies Traynor’s report to creditors warned that Lend Corp lacks any proven track record in managing such an undertaking and would rely on Reading, described as the “architect of the company’s failure”. The report also highlighted concerns over the lack of transparency regarding Fortress’s financial activities, including loans used to purchase properties in Dubai and Spain. Nevertheless, Begbies acknowledged that creditors may still consider the proposal as it offers the potential for better returns compared to liquidation. The CVA estimates a return of 42p in the pound for creditors, compared to just 3p from liquidation. However, administrators cautioned that achieving this outcome is far from certain.

This complex insolvency case has drawn significant attention, with high-profile creditors such as Scotland and Napoli footballer Scott McTominay, who is owed £1 million. As creditors deliberate their options, questions remain over whether Lend Corp can deliver on its promises or whether the proposed CVA represents little more than speculative hope for recovering losses.

Ashley Reading defended the proposal, expressing his gratitude to Begbies and Lend Corp for offering creditors a second chance at recovering a portion of their money. In a statement, he reiterated his belief that Fortress had adhered to proper fundraising processes. Attempts to reach Lend Corp’s director Mario Falcone for comment were unsuccessful.