City Financial has filed a notice of its intention to appoint an administrator after a difficult 2018, according to reports.
In court documents filed on 22 February, and seen by Reuters, the firm’s chief executive officer Robert Hain, was quoted as saying the firm “is likely to become unable to pay its debts”.
In a subsequent email to the news agency, Hain clarified: “City Financial is not in administration … We are working with an advisory firm to review the options available to the business”.
Hain told Reuters that City Financial had filed a “notice of intention to appoint administrators” as a protective measure while the board considers its next steps.
‘Fall from grace’
Darius McDermott, managing director at Chelsea Financial Services, said the development was “certainly a fall from grace” for the London-based hedge fund, noting they had been much bigger a few years ago.
The firm’s assets under management more than halved by the end of 2018, falling from $3.3bn (£2.5bn) 12 months earlier to $1.2bn. It also reported a loss before tax of £16.7m for 2017, up from a £1.4m loss in 2016, due to rising costs, including the acquisition of three funds.
In December, Reuters announced that City Financial and the chief investment officer of its Decca Fund, had decided to close its credit strategy after a difficult year.
The group completed a restructuring of its business last year, which resulted in the closure of its New York office. It was looking to sell off its long/short equity strategy, PivotBase.
A spokesperson for City Financial declined to comment.
