Tue, 16 Mar 2021 | ADMINISTRATION
Car leasing firm Buy2LetCars has fallen into administration a month after the Financial Conduct Authority (FCA) placed restrictions on its parent company, Raedex Consortium Ltd.
Buy2LetCars attracted investors by promising annual returns of up to 11 per cent on a minimum loan investment of £7,000 over the course of three years. Investments were used to buy new cars, before they were leased to individuals with a poor credit history through another subsidiary, Wheels4Sure.
In February 2021, the FCA banned the company from arranging new leases with investor funds, saying: “We have engaged with the firm on a number of occasions with regard to regulatory issues, including the structure of its business and its financial viability. This has culminated in the action we took on Friday 19 February 2021.”
While Raedex at the time criticised the FCA decision as “bizarre”, it has now fallen into administration. RSM Restructuring will act as administrators to Raedex and subsidiaries Buy2LetCars and Rent 2 Own Cars Ltd.
Following the administration, the FCA stated that all investors would become creditors.
The FCA said: “On 19 February 2021, we imposed a number of restrictions on Raedex requiring the firm to cease conducting regulated activities because of serious concerns about its finances. The restrictions stopped Raedex from entering into any new car leases, while allowing existing lease agreements to remain. Buy 2 Let Cars Ltd subsequently stated it was not accepting any new investment.”
“Following the FCA’s concerns, the directors of Raedex obtained further financial accounting advice, the advice of insolvency practitioners and, on 15 March 2021, appointed Graham Bushby and Matt Haw of RSM Restructuring Advisory LLP as administrators over Raedex, Buy 2 Let Cars Ltd and Rent 2 Own Cars Ltd.”
In a statement, administrators RSM said: “Raedex will continue to trade in administration, subject to the Restrictions. Lease agreements between Raedex and its existing customers remain in place; anyone leasing a vehicle from Raedex should continue to pay their monthly payment in the normal way to secure their ongoing usage of the vehicle.”
“The Administrators are now evaluating the current financial position and options for each of the Raedex Group companies. They will seek to achieve the best outcome for each company’s creditors as a whole. It is too early for the Administrators to conclude how much money they will be able to return to the creditors of each company in the Raedex Group, or within what timeframe.”
Concerns have been raised that the structure of Buy2LetCars' business will make it difficult for creditors to reclaim their investments. Unlike Raedex, Buy2LetCars is not regulated or authorised by the FCA and the investments made have gone towards vehicles which are now throughout the UK. Creditors will essentially be relying on leaseholders continuing to make payments or on these vehicles being recouped by the company or its administrators.
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