Link: Corrie Bauckham Batts Limited enters liquidation | FCA
Context
The FCA has published a customer-facing page on its website announcing that FCA authorised and regulated Lloyd’s wholesale insurance broker, Corrie Bauckham Batts Limited, has entered liquidation, and that John Dean Cullen and Rachel Helen Lai of Menzies LLP were appointed as joint liquidators of the firm. The firm specialised in placing North American non-marine insurance business into the London Market on behalf of its clients.
The web page contains seven brief Q&As which are aimed at customers. Having considered the firm’s financial position, the directors concluded that the firm is insolvent, and further to a shareholder vote, two insolvency practitioners from Menzies LLP were appointed as joint liquidators. Customers should contact the joint liquidators for further information on the firm (www.menzies.co.uk/corriebauckhambatts, e-mail: CBB@menzies.co.uk, telephone: 029 2049 5444 or 029 2067 4996).
Key points to note
The information provided below may assist any of your clients that have dealt with this firm, but it is also provided because of the wider issues around client money, group risk and due diligence.
The firm had restrictions placed on it in March 2022 comprising a new business restriction, limiting receipt of further client monies, an assets restriction, and to secure records. There may have been a deficit in client monies. The restrictions are described on the Financial Services Register and the firm’s own website. The liquidation has been put to the FCA as a Voluntary Variation of Permission, i.e., the firm is formally asking to have its Permissions removed, when in reality the FCA may well have presented the firm with the restrictions and expected them to be accepted without challenge. Menzies, the liquidators have put up some FAQs and have already indicated there will be a shortfall in the client money account after taking out their costs of resolving the liquidation and distribution of client monies.
The FSCS has not yet declared the firm in default, but given the type of business there may not be any eligible claimants anyway.
From the publicly available information (Companies House) in some ways it is surprising that the firm has got into trouble but there were some warning signs.
For example, the accounts were overdue, with the accounts for the year ended 31 December 2020 which were due 30 September 2021 not being filed. The accounts for 31 December 2019 were late, only signed and filed in October 2021, but did show a healthy financial position of £4m of net assets and said they were a going concern to the end of 2022. Although now over two years ago, and so possibly out of date, these accounts showed that the firm held £8m of client money.
The bulk of the firm’s net assets was £4m owed by group undertakings. The group position also looks challenging as the latest accounts for the holding company, Corrie Bauckham Batts Holdings Limited, are for 31 December 2018. This intercompany balance was not repayable until the holding company could afford it and so it is questionable as to whether the regulated firm should have been treating it as an asset. It is also uncertain what other assets the holding company will have to repay the loan.
Next actions
None – for information and awareness, but any further developments may be of interest to firms generally.