In Administration

JLG, together with its subsidiaries (together, the “Group”) has encountered a number of financial challenges over recent years, including:

(i)

losses experienced from the core lending book as a result of the impact of the COVID-19 pandemic on underlying borrowers many of whom were unable to service their loans and/or required payment holidays;

(ii)

the operational cost base of the business being too large;

(iii)

inconsistency in the application of the policies and procedures around the underwriting process and management of the loan book; and

(iv)

losses sustained on large commercial loans and loans to companies connected with certain of JLG’s former executive directors which were outside of JLG’s core business (those directors have now left the business and been replaced with a new management team).

As a result, Geoff Rowley and Paul Allen of FRP were appointed as joint administrators on 15 June 2022 (the “Joint Administrators”).

Insolvency arises when individuals or businesses have less assets than liabilities or are unable to pay their debts as they fall due.

Administration is a formal English insolvency procedure that is available in the UK to a company that is insolvent, or is likely to become so. The procedure involves placing the company under the control of one or more insolvency practitioners and the protection of the UK courts.

In this instance, the Joint Administrators were appointed by the board of directors.

Administration includes a moratorium which applies for the period of time in which the company is in administration. This stops any legal action or process against a company from proceeding, unless the Administrators or the English Court give their permission.

An administrator must perform his functions with the objective of

1

rescuing the company as a going concern, or failing that;

2

achieving a better result for the company’s creditors as a whole than would be likely if the company were wound up (without first being in administration), or failing that;

3

realising property in order to make a distribution to one or more secured or preferential creditors.

The Joint Administrators owe their duties to the Company’s creditors as a whole. No individual creditor or group of creditors can be preferred in any way. All creditors have to be treated equally.

At this time, based on current information, it is likely that the third objective will be pursued.

A pre-pack is a shortened form of the phrase “pre-packaged administration”. A pre-pack is a deal to sell the assets of an insolvent company, which is agreed prior to the insolvency, and is then usually completed almost immediately after the appointment of the Joint Administrators.

This is not a pre-pack administration.

The Joint Administrators will review the Company’s position and collect information about the full extent of the assets and liabilities.

The Joint Administrators will take over the day-to-day control and management of the Company.

It is not possible at this stage to predict how long the administration will last as the Joint Administrators have only been in place for a short period of time.

The Joint Administrators will write to all known creditors of the Company as soon as is reasonably practical to inform them formally of the appointment.

The Joint Administrators will send the Joint Administrators’ proposals to all known creditors with 8 weeks of appointment. It will detail steps already taken by the Joint Administrators and what matters the Joint Administrators intend to deal with going forward.

The Joint Administrators are also required to provide a written update on the administration to all known creditors for each six month period of the administration. This will be sent within one month of the end of each 6-month period.

On the date of the administration, all amounts that the Company owes to any creditor are frozen. The Company’s assets will be realised and the proceeds, after the costs of the administration, will be allocated to the creditors depending on what type of creditor they are.

The types of creditor are:

1

secured (by fixed and floating charges);

2

preferential; and

3

unsecured.

Secured creditors have security registered at Companies House.

Preferential creditors primarily consist of employees for arrears of wages, accrued holiday pay, unpaid contributions to occupational pension schemes and state scheme premiums, all within certain limits.

Unsecured creditors are all other non-secured and non-preferential creditors. These are usually the normal trade creditors. They rank below preferential and secured creditors, with the exception of when the prescribed part is applicable (see below).

JLG has three retail bond issuances, being:

1

£6m 7.25% bonds due in December 2021;

2

£7m 6.75% bonds due in December 2023; and

3

£17m 7.75% bonds due in December 2025.

Each issuance is secured by a qualifying floating charge. This means that as a retail Bondholder of JLG, you are a secured creditor.

No, the bonds are not regulated.

JLG Group Plc was not regulated by the Financial Conduct Authority (FCA), the financial regulator, and was issuing its own bonds, which is generally not a regulated activity. Because of this, customers of the Company are not able to claim compensation through FSCS on this basis.

However, we understand that authorised firms may be responsible for introducing and/or advising customers to invest in JLG Group Plc’s bonds. It is therefore possible where this is the case, and subject to certain eligibility criteria, that the FSCS may be able to consider a claim against JLG Group Plc or the authorised firm involved.

In the first instance, customers that dealt with an FCA-authorised firm should make contact with the authorised firm itself and/or the Financial Ombudsman Service (FOS) to make a claim. If the regulated firm is unable to settle any claim you may have because it is itself insolvent, the FSCS at that point may consider your claim.

Please note, the FSCS is operationally independent of the FCA and it is the FSCS that determines whether compensation is payable under the FCA’s compensation rules. Bondholders can find further information on the FSCS website. You may be able to claim compensation from the Financial Services Compensation Scheme (FSCS), depending on FCA criteria.

You can find out more on the FCA website.

Customers that dealt with an FCA-authorised firm also have the option to contact the Financial Ombudsman Service (FOS) or the FCA - as well as the authorised firm itself.

No. If the Administrators ask you to submit a claim, you can make your claim directly to the Company. Alternatively, you may be able to pursue a claim directly through the FSCS as above.

If you are approached by a company, including a claims management company (“CMC”), offering to help you recover your money, you should proceed with caution. Whilst a CMC can help you submit a claim, it is up to you if you want to use one and they will charge you for this service. If you decide to use a CMC, please make sure you understand the scope of their services and how much the service will cost you before agreeing to its service.

For the vast majority of JLG Group Plc’s customers/bond holders, there will be little or no benefit in involving any third party in making a claim.

For example, if you use a CMC to assist in the return of your assets, the CMC is likely to seek a fee which may reduce what you get back.

If you are considering using a CMC, or other third party, to assist with the return of your assets, we suggest that before you decide to proceed with this route you first discuss this with the administrators using the contact details provided on their website. The FSCS has also produced some points to consider before using a CMC which can be found on its website.

All customers should remain alert to the possibility of fraud. If you are cold called by someone claiming to be from JLG Group Plc or the administrators, please end the call.

As noted, JLG Group Plc was not authorised by the FCA but the introducers of the bonds to customers may be FCA authorised. Therefore, the administrators will engage with the FCA as part of the Administration process.

The administrators are officers of the Court and need to comply with all insolvency law. The individuals appointed are also licensed insolvency practitioners and supervised by their regulatory bodies.

When a secured creditor has a floating charge registered after 15 September 2003, a proportion of the funds available to them is set aside for distribution to unsecured creditors. This is the prescribed part. The floating charges securing the JLG retail bonds were registered in 2014 and 2015 respectively.

Insolvency legislation sets out how the prescribed part is calculated and if it is applicable further details will be provided in the Joint Administrators in due course.

Details of any meeting will be disclosed in the Joint Administrators’ proposals. The purpose of a meeting would be to allow the creditors to consider and vote on the Joint Administrators’ proposals.

If no meeting is called then the rationale for this will be explained and the basis for creditors to call a meeting should they wish.

The Company’s position is complex and it will take some time to determine the full extent of the financial position. It is not certain what (if any) return there will be to any class of creditor. Creditors will be updated through the Joint Administrators’ proposals and reports.

No. It is anticipated that a restructuring of the Group companies will occur which will avoid administration.

JLG Group PLC is not the main operating company. The operating company is Just Cash Flow PLC, which remains operational, and customers should continue operate their accounts in the normal manner.

For company queries: JLGGroupPLC@frpadvisory.com

For Media queries: rory.fletcher@citypress.co.uk