Isle of Man-based Quadris Environmental Forestry Fund (Quadris) has been suspended, following a declaration of default by its US lender, leaving 1200 investors fearful of losing all or a substantial part of their money.
US hedge fund Crestline Arvore has appointed a joint receiver, Craig Mitchell and David Craine of Brown Craine & Co.
The fund was set up in 2001, and has more than £100m invested in teak plantations managed by Floresteca, the world’s largest private teak supplier and operator, managing over 100,000 hectares of forestry land.
Signs that the fund was experiencing turbulence emerged last year when Quadris posted a US$20m (£15.3m) loss for 2016, and auditors expressed doubts over the fund’s ability to continue to trade.
The Isle of Man Financial Services Authority (IOMFSA) shared those worries, and appointed Gordon Wilson of Isle of Man-based consulting outfit CW Consulting as adviser to the fund. On February 17, in a sign that the fund’s troubles were worsening, he was appointed controller of the fund, acting for the regulator.
There are, however, one or two signs that might bring some comfort to investors, Wilson, said. Speaking today to International Investment, he said there were cautious signs for optimism, saying: “I was appointed Controller on 15 February 2017, and I am now working to engage with all relevant parties to secure a long-term resolution to the funds issues in the best interests of participants. That work is ongoing.”
Stephen Metcalf, who is a Warsaw-based partner at Synergi Investment representing £7m of investment by Global Net members with shareholdings in Quadris, told local news outlet The Manx Independent: “Crestline as the lender is claiming that there have been a number of defaults on their loan and have therefore decided to appoint a receiver, to place their own representatives onto the board and to proceed to run the fund, obviously to their own significant benefit.
“Legal opinion as stated by lawyers from both New York and the Isle of Man is that the default is by no means certain. Surely, the regulator cannot sit back and do nothing while claiming to be protecting the interests of shareholders.”
He added: “Shareholders find it incomprehensible that the underlying assets that they bought remain intact and offer significant value and yet they stand to potentially lose either a significant part or possibly all of their money.”
And a source close to the fund, speaking today on condition of anonymity, told International Investment: “This could be sabre-rattling by the lender, and certainly seems premature. The assets are still there — we’re hopeful that a rescue can be mounted.”