The High Court has given a green light for Woodford Equity Income Fund investors to vote on Link Fund Solutions’ proposed scheme of arrangement, four years on from the fund’s suspension.
In a hearing yesterday (12 October), presided over by judge Kelyn Bacon, justices handed down an order allowing retail and institutional investors vote on the £230m scheme of arrangement as a single class, with no distinction between the two investor groups.
An explanatory statement will be issued to investors on 20 October.
Woodford investors will then have until 4 December to complete a voting form and submit it to Link Fund Solutions.
A creditors meeting is then expected to take place on 13 December before a final voting outcome scheduled for 15 December.
A second court hearing will take place on 18 January 2024. If a majority of investors vote for the scheme, and the court approves it, Link will then begin distributing redress to investors.
On the development, AJ Bell head of investment partnerships Ryan Hughes said: “An interesting element of the court case were legal arguments over whether retail and institutional investors should be treated differently. However, this argument brought forward by some investors was not allowed by the judge who deemed all investors should be treated equally under the scheme.
“This is another important step for investors, who have been patiently waiting well over four years for closure, as the hearing set out the terms for investors to be able to vote on the proposed settlement scheme. Investors will know the outcome of the vote before Christmas and while a positive vote will hardly bring much Christmas cheer, it will at least move investors closer to the end of a process that in the eyes of many has dragged on for way too long.”
Resolution draws closer
After four years, an outcome is edging closer for trapped Woodford investors.
The hearing comes three days after Waystone Group’s takeover of Link was formally completed.
In April, Link agreed to provide redress payment of up to £235m to investors still trapped in the collapsed Woodford Equity Income Fund, provided the takeover went ahead.
Upon the conclusion of its investigation into Link, the FCA said on 19 April that it had made “critical mistakes and errors”, as Woodford’s authorised corporate director, in managing the fund’s liquidity.
In September last year, the FCA hit Link with a £50m fine, and ordered that up to £306m be set aside to repay those investors still stranded in Neil Woodford’s (pictured) defunct strategy.
The fund, run by Woodford, was shuttered in 2019 after a wave of redemption requests exposed the strategy’s high exposure to illiquid assets, which meant it could no longer repay investors who wished to sell their holdings.