An unspecified numbers of investors but described as “hundreds” face uncertainty on the news that the Guernsey-registered investment subsidiary of well-known philately company Stanley Gibbons has gone into administration, though the parent company is “ring-fenced” from the fallout.
The subsidiary was a investment scheme that lured investors to purchase “rare” postage stamps on the guarantee of a “buyback” that promised either 75% of the stamps’ present market value or 100% of the price that they had paid for them.
The scheme is said to have more than £70m in liabilities, though only £6.5m of that is owed to the parent company.
The subsidiary holds about £12.6m in “philatelic stock”, said the parent company in a statement issued today.
The subsidiary’s “potential liabilities”, said the company, primarily consist of around £54m contingent liabilities relating to the buy-back guarantees, and a further approximate £11m in liabilities included on its balance sheet.
The £6.5m owed to the parent company would, it said, “rank alongside other unsecured creditors, mainly consisting of bank debt and payments due to holders of
The scheme ceased accepting new clients last year amid concerns over the exposure contained in the 75% buy-back scheme.
One scheme required a minimum deposit of £10,000 for a period of between five and seven years, which would buy between five and seven stamps.
PwC, which has been appointed administrator, said that the first task was to reconcile the stock against the investment portfolios but said that there was “no reason” to expect any discrepancies.
A need to reduce liabilities
The motivating factor for the parent company appears to be reducing the parent company’s exposure to liabilities as a result of the buy-back guarantee.
Unlike other collapsed investment schemes, there is still stock that is yet to be assessed to determine the value for investors.
Over the past decade, the market for rare stamps has risen and, as the scheme was marketed as a long-term hold, this does not mean that investors have yet lost out.
However, problems could arise for investors that wished to cash in now, because the sudden appearance of a large number of rare stamps at auction could have some downward influence on their value.
Parent company ‘bullish’ about its future
The parent company, which has existed since 1856, was bullish about its long-term prospects, though it accepted that this was a trying period for it.
While current trading remained “subdued”, it said, it was in default under its banking facilities. However, it said that it was “in constructive dialogue with the bank in relation to its ongoing financing”.
It announced that it had appointed Guy Croton as managing director of philately.
“Guy is well respected,” said the company, “following a 22-year career in the industry, the last 15 years at Spink, latterly as head of the philatelic division.”