LIFT CAPITAL
LIFT CAPITAL WAS A SIGNIFICANT MARGIN LENDER PROVIDING LOANS TO RETAIL CLIENTS TO PERMIT THEM TO INVEST DIRECTLY INTO EQUITY SECURITIES VIA THE LEVERAGING OF THEIR INVESTMENTS.
Lift Capital provided financial services, mostly in the form of margin loans to retail clients or through financial advisory platforms.
Lift clients mortgaged their securities for a margin loan, Lift then delivered those securities to its secured creditor for funding. Following a significant share market downturn, Lift was unable to meet its covenants to Lenders and was placed into Administration in May 2008.
The Administrators:
- Took control of $1 billion in listed securities, derivatives and funds managed by Lift Capital;
- Undertook an intensive reconciliation process to clarify, where possible, beneficial ownership to underlying securities;
- Following a sale process, delivered proceeds to client margin lending accounts;
- Intensive consultation with a Committee of Creditors and Committee of Inspection;
- Advanced claims against the secured creditor, then undertook a mediation to settle those claims to enable improved returns to creditors;
Processed those claims and distributed proceeds through a Scheme of Arrangement process.
Ultimately, creditors received 73 cents in the dollar on the underlying equity in their portfolios.