Administrators' warning over Fortress insolvency move
A proposal for a five-year insolvency process made by a vehicle called Lend Corp Limited, which is linked to the purported 'architect of the company's failure', was last week circulated to creditors. The second proposal for a company voluntary arrangement had been made only two months after a first attempt was voted down by creditors, including HM Revenue & Customs.
Fortress was an investment scheme whose backers included several celebrities as well as members of a southeast London church. It promoted returns of up to 18 per cent a year, before collapsing in September 2023.
Its failure has triggered an investigation by the Metropolitan Police and led to an extraordinary dispute between administrators at Begbies Traynor and the Fortress creditors' committee. Begbies has claimed Fortress has 'all the hallmarks of a Ponzi scheme'.
• 'Architect' of demise of Fortress linked to insolvency proposal
Borrowers included Kevin Maxwell, son of the late media baron Robert Maxwell, and investors included Scott McTominay, the Napoli and Scotland footballer. McTominay, 28, is owed £1 million, according to the latest schedule of unsecured creditors.
In total, unsecured creditors have been left with a deficit of £19.5 million, mostly owed to investors.
A spokeswoman for the Met said officers continued to investigate allegations of fraud. There have been no arrests.
The sole director of Lend Corp, incorporated around the time Fortress entered administration, is Mario Falcone, who made his name in the television series The Only Way is Essex. Falcone, 37, was previously listed as Fortress's head of business development and is owed £450,000 by Fortress.
• The extraordinary downfall of Fortress Capital Partners
In the report sent to creditors, seen by The Times, administrators said Lend Corp has been set up to 'operate in a similar way' as Fortress and will be 'utilising the services' of Ashley Reading, Fortress's former chief executive who was made bankrupt in 2010.
Lend Corp has committed to pay 50 per cent of the net profits into the CVA over five years, including £350,000 upfront. This is in return for the acquisition of assets of Fortress, which include the overdrawn directors' loan accounts of Reading, as well as for his daughter Cameron Reading, 25, a model, Fortress's former head of investor relations and the girlfriend of McTominay.
It also includes any interest in a luxury Kent home occupied by Reading's family as well as debtors to Fortress, including Maxwell.
'Our view is that this CVA is highly speculative, and creditors should be aware that other than the initial contribution there may be little further return,' Begbies stated in its report.
• Concern over plan to take Fortress out of administration
They warn that Lend Corp has 'no track record' and will be 'working closely with' Ashley Reading, 'who is himself a former bankrupt and architect of the company's failure'.
While they said the proposal 'represents a significant 'hope' value and no more', they said creditors may wish to consider it because the alternative, liquidation, may produce worse returns.
The CVA proposes generating an estimated £7.7 million, a 42p-in-the-pound dividend for creditors. Begbies said this outcome may be better than the estimated 3p from a liquidation. However, the firm is 'unable to say with any certainty' that the proposed returns are achievable or whether the proposal 'strikes a fair balance between the interests of the company and the creditors'.
During the insolvency there had been concerns that Ashley Reading had not been 'forthcoming with information', particularly in relation to loans from Fortress to his daughter used to purchase property in Dubai and Spain, administrators claimed.
Ashley Reading said: 'I'm grateful to Begbies and Lend Corp for giving creditors a second chance to recover a significant portion of their money. I hope they choose to take it.'
He has previously said that 'all funds raised by Fortress complied with correct processes'.
Falcone was approached for comment.
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