Fixi plc bankruptcy results in £1.26M FSCS compensation
Fixi plc’s administrators PWC have issued a progress update with their work on the file, indicating that they are well on their way to compensating Fixi creditors, including former clients and employees of the bankrupt FX broker.
Fixi plc was an institutional FX broker based in London, controlled by Australian FX entrepreneur Goran Drapac. According to PWC’s records, the business had been financially strained and the focus of regulatory attention having made losses for a number of years. In December 2018 the Company reported to the FCA that it was below its minimum regulatory capital threshold due to poor revenues and a lack of funds being injected by the main shareholder. The company filed for administration in late 2018.
As Fixi plc was authorised by the FCA and provided FSCS-protected financial products, the FSCS has agreed to pay compensation of up to £85,000 to investment creditors that meet the relevant criteria. PWC developed a protocol with the FSCS to facilitate the payment of compensation to those creditors.
To date, PWC stated that it has received 79 claims from clients and creditors. 32 of these claims have been reviewed, agreed and compensated by the FSCS. They have paid £1.26 million in compensation to the 32 clients.
In addition, PWC said that it has successfully recovered £843,640 of cash balances from the company’s various bank accounts, electronic wallet accounts and funds held by solicitors.
Regarding the company’s (former) controlling shareholder Goran Drapac and his Australia based holding company Drapac Financial PTY Limited, PWC stated that in January 2019 Mr. Drapac and his Drapac Financial holding company provided a guarantee to Fixi, to support any solvency shortfall. This was effected through a General Security Agreement and Deed between Mr. Drapac, Drapac Financial, and Fixi which guaranteed all amounts owed by Fixi.
Drapac Financial intended to sell its 2,000 shares in AxiCorp Financial Services Pty Limited – the holding company for Australia retail FX broker AxiTrader – to satisfy such amounts. In February 2019 300 of the 2,000 shares in AxiCorp were sold, with the company receiving £270,000 of the sales proceeds. Mr. Drapac continued discussions for the sale of the remaining 1,700 shares throughout March and April 2019, however the completion of the sale to an interested buyer continued to be delayed, with no clear indication of a timeline for completion.
Throughout this process, Fixi was returning segregated funds to segregated clients, having requested confirmation of payment details from all of them. Most segregated clients were paid during this process. At the date of liquidation there were clients who had not responded and as a result have not had their funds returned.
Following discussions with the FCA regarding the continued lack of progress in selling the remaining 1,700 shares in AxiCorp by Drapac Financial, a board meeting of the directors of Fixi was held in May 2019, where the board decided to put the company into a CVL (Creditors’ voluntary liquidation).
PWC said it has contacted Mr. Drapac and Drapac Financial, to request a contribution to the liquidation under the guarantee. The administrator said however that it did not receive what it calls a “suitable offer”, and therefore instructed counsel in Australia (Dentons) to write to both parties to seek settlement. PWC was then advised that Drapac Financial had gone into liquidation. PWC said it is corresponding with the liquidator about Fixi’s claim in the Drapac liquidation. It continues to negotiate with all parties involved with a view to reaching a full and final settlement with Mr. Drapac and the Australian entities.
Regarding Fixi’s employees, PWC said that it believes that the company’s employees were made redundant and the majority were paid everything owed to them prior to the liquidation. Since then the administrator has had a small number of claims from former employees both in the UK and Georgia. However it has been difficult to establish the validity of all of the claims due to a lack of accounting records.