First Capital Factors Administration has ended

First Capital Factors Ltd which went into Administration just over two years ago has just filed a notice at Companies House that the Administration has finished.

The Administration has left loads of questions unanswered so I wonder if we have heard the end of the matter.

The Statement of Affairs showed a deficit of just over £5.6m which begs the question where did it all go as surely a small supposedly profitable factoring company couldn’t lose that amount of money in it’s normal way of business.

It seems that a number of their clients were asked to raise fictitious invoices for what were evidently substantial amounts of money which unless I am missing something is fraudulent on behalf of the person or persons who asked them and those that supplied the fraudulent invoices which to my mind is criminal.

This isn’t a victimless crime as whilst people may not have much sympathy for banks in the form of Leumi a loss of close on £2m was made by the 350+ investors from the Thincats syndicate who recovered not a single penny back from this debacle. The investors in Thincats aren’t all multimillionaires but are ordinary people like you or I who looked for a slightly higher return on their savings than on offer from the mainstream banks.

I would have thought that after two years and with the Administrators having reported their findings into the conduct of the individuals in the company as well as the clients’ involvement that some murmurs would have been heard about fraud enquiries.

Us outsiders won’t know which of their clients were involved but as most of the clients went either to Leumi ABL or elsewhere after the Administrators were appointed I would guess that the tainted ones are those clients that didn’t move at all.

I am aware of one of their clients who switched their business out of the company factoring with First Capital Factors to a previously dormant and fresh company at about the time of the Administration and wonder if they are one of the companies involved as I understand that the principals of the company were long standing friends of the chairman of the factoring company.

In the late seventies there was a similar situation at Bank of America’s factoring subsidiary where a group of their clients submitted fraudulent invoices at the behest of the factoring company’s directors and that ended up with three and four year jail sentences for the two executive directors of the factor who organized the fraud plus two directors of the clients who issued the invoices.

Somehow I don’t think that we have heard the last of this.

Factoring brokers – a new low

I had lunch last week with a director of a factoring company and he laughingly thanked me for not trying to sell him the client list of First Capital Factors which was a small independent factoring company that had recently gone into administration.

factoring vultureIt seems that once the Administration became public knowledge several vultures factoring brokers obtained a list of their clients from Companies House and tried their hardest to hawk the list around to a few factoring companies as well as trying to get their clients on board so that they could place them elsewhere, earning nice fees in the process.

As if that wasn’t bad enough someone calling herself Clair Tweedy started contacting the clients claiming that she worked for NACFB which she stated was part of the Government and she told them that funding of First Capital Factors clients would cease within 90 days but that she could help them relocate to a new factoring company.

Yuk – despicable behaviour but having been broking for 17 years I shouldn’t be surprised by anything any more from the huge commissions that some of the larger factoring brokers demand for introducing clients, to the churning of clients at the end of the year to get another introductory fee but contacting factoring company clients and blatantly misrepresenting who you are is a new low even for this industry.

factoring broker vultures feeding frenzyMy understanding of the situation is that Leumi ABL have taken over the debtor book of First Capital and have continued funding but those companies that don’t really fit into their client profile will be asked to find alternative factoring arrangements but will be given time to do so and will not just be thrown out on their metaphorical ears.

Anyone that wishes help in finding another factoring company but doesn’t want to deal with one of the vultures currently pecking at the carcass please don’t hesitate to contact me if you want to deal with an ethical broker who refuses to join in with this unseemly feeding frenzy

 

Ian Johnston – Factoring Solutions – 01827 707680

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