Hearings to determine how the £4.5m will be distributed to Football Index clients and stakeholders will begin on 10 May after administrators requested a quick decision on the case.
Rescue and recovery specialists Begbie Trainor, who was appointed on March 26 to manage the finances of Football Index, revealed she is under increasing pressure from the UK Gambling Commission (UKGC) to ensure customers get their lost money sooner rather than later. .
"The joint administrators would be very grateful if the application were considered as soon as possible," Begbies Traynor administrator Adrian Hyde wrote in his second testimony.
“The reasons for the urgency are that the company is regulated by the Gambling Commission in the UK and the Jersey Gambling Commission in Jersey.
“Both commissions are understandably very keen to ensure that the money in the trust account is paid out to the proper beneficiaries as soon as possible, and the UK Gambling Commission in particular is putting considerable pressure in this regard,” he added.
On 30 April Begbie Trainor asked the business and property courts of England and Wales to determine the appropriate distribution of the £4.5m held in the Football Index Player Protection Account and determine which clients may be entitled to claim the return of these funds.
“This is the first step towards distributing cash balances to Football Index customers,” Hyde confirmed.
The Football Index Player Protection Account, or trust account, held by Nedbank, based in the Isle of Man, was previously frozen by the bank amid speculation that the Football Index would go into administration.
Since then, Nedbank has been instructed to transfer the amount to the account of the Viscount of Jersey, although EGR understands that they have not yet been received due to delays due to bank holidays in early May.
Football Index clients have received dividends from individual footballers' stakes in their portfolios based on actual performance and the media buzz surrounding that player.
These shares were a three-year bet on whether the player would appreciate in value. Users could sell their shares back to the Football Index at any time using the Instant Sell feature, though this option was removed last year and replaced with stock market-like order books. It was a much-criticized move that led to a market crash and a sharp drop in the value of portfolios.
Dividends, which were cut shortly before the firm's collapse, were typically credited to clients' e-wallets the day after they were accumulated, while Football Index transferred money from its general account to a trust account to reflect these dividends on a weekly or monthly basis. according to the director of the company.
Since the trust account has been frozen by Football Index and Nedbank, the dividend has continued to rise and is viewable on the Football Index app.
“This is misleading to customers because no more transfers are made from the company’s general account to fund the trust account,” Hyde wrote.
“At first glance, accrued but non-transferable dividends after administrative work represent an unsecured obligation of the company to the beneficiaries of the trust.”
As player accounts change and dividends continue to rise, Begbie Trainor has been tasked with recommending a suitable settlement date for payout settlement.
For example, one particular client account with dividends accrued before 26 April is expected to receive £6,000 over the life of its player share portfolio.
“Each settlement date and interpretation has different implications for each client’s eligibility calculation based on their relative cash balances, portfolio sizes, and length of remaining stakes,” Hyde wrote.
As a result, Begbie Trainor recommended an administration date of March 26 as a suitable date for calculation. At the time, Football Index's trust account was in surplus of over £1 million and as of that date, customers will be paid the full amounts shown on their e-wallets as their entitlements.
According to the reports, this does not help account for the overall portfolio investment, which could see Football Index clients lose more than £90m in total.
Of the Football Index's 278,585 customer accounts, 119,510 are owned by those with zero cash balances in their trust account or their e-wallets. The remaining 159,075 people have accumulated funds in a escrow account and should be entitled to claim their cash balances.
Football Index director told Begbie Trainor that 40% client accounts have no cash balance or stock portfolio, equivalent to no outstanding bets, while 13% have cash balances but no "stocks" in their portfolios.
About 34% of clients had small portfolios, while 9% are considered to have medium portfolios, dropping to 4% for large portfolios.
At least five of the "large portfolio" clients had an e-wallet account balance of more than £50,000.
As at 11 March, 261 clients had trust account balances between £1,000 and £100,000.
Reaffirming his desire for a quick fix, Hyde wrote: “Such customers, like other customers with smaller balances, experience significant difficulties.
“I am also aware that a number of clients with trust account claims are experiencing significant stress due to the current situation, and we have learned that many of them are suffering from mental health issues that can be resolved with an expedited trust account refund.” he added.
Finally, the admins have come up with a quick solution that will allow their CVAs to be filled, which could pave the way for the restart of the Football Index before the start of the 2021/22 football season, with "urgent work progress". scenes to achieve this.
The full testimony can be read here.