Proposed settlement scheme for Investors in the LF Equity Income Fund17 November 2023
What has happened?
The Fund, previously known as LF Woodford Equity Income Fund, was suspended on 3 June 2019. Link Fund Solutions Limited (“Link”), the authorised corporate director of the Fund, is offering to settle potential claims which ‘Scheme Creditors’ may have in connection with the suspension and wishes to establish the Scheme.
To be established, the Scheme has to be approved through a vote by Scheme Creditors (the “Vote”). Specifically, more Scheme Creditors must vote for it than against it, and they must represent 75% or more by value of the voting Scheme Creditors.
What does this mean for your client?
If your client is a Scheme Creditor, your client is eligible to participate in the Vote – depending on the product(s) through which the investment in the Fund is held. See the table below.
|Product (Wrap)||Is your client a Scheme Creditor and entitled to participate in the Vote?|
|ISA (Individual Savings Account)||Yes|
|SIPP (Self Invested Personal Pension)||No - the Scheme Creditor is the product provider. This is due to the legal structure of the product – the product provider is the legal owner of the holdings in the Fund.|
|International Portfolio Bond||No - the Scheme Creditor is the product provider. This is due to the legal structure of the product – the product provider is the legal owner of the holdings in the Fund.|
|Product (Elevate)||Is your client a Scheme Creditor and entitled to participate in the Vote?|
|ISA (Individual Savings Account)||Yes|
|GIA (General Investment Account)||Yes|
|PIA (Pension Investment Account)||No - the Scheme Creditor is the product provider. This is due to the legal structure of the product – the product provider is the legal owner of the holdings in the Fund.|
If your clients hold multiple products, they’ll be entitled to participate in the Vote in proportion with the value in the Fund which is held through the product(s) for which they are a Scheme Creditor. Your client is only entitled to one vote even if they hold multiple products.
Where the product provider is entitled to participate in the Vote, they are voting in favour of establishing the Scheme.
This is because the product provider will not pursue other methods of seeking compensation (such as litigation) on an investor’s behalf. The product provider also acknowledges that establishing the Scheme may mean that:
(a) investors are likely to be paid earlier; and
(b) investors are likely to be paid more.
This is because Link stated that they intend to defend any claims raised against them if the Scheme is not established. This may take several years and the cost of this may mean that Link will not have as much money to compensate investors.
Even though the product provider may participate in the Vote, any compensation paid to them if the Scheme is established will be paid out to investors in proportion to the value of investments held in the Fund.
What happens if the Vote is passed?
If the Vote is passed and the Scheme is approved, it will be established. The Vote itself is not a vote for or against a specific amount of compensation.
What happens if the Scheme is approved?
If the Scheme is approved and established, it will create an agreement between Link and the Scheme Creditors. All Scheme Creditors (including those who voted against establishing the Scheme and those who did not vote) will be bound by the agreement. Investors in the Fund will share a settlement fund.
Claims which investors may have against Link or its company group will be settled, and investors will not be able to claim against Link or with the Financial Services Compensation Scheme (FSCS).
What happens next?
Please make your client aware of their options, detailed in the table below depending on their circumstances, and take the appropriate action.
|Who your client is||Action you should take before 12:00 noon on 29 November 2023 (the “Deadline”)|
|Your client is a Scheme Creditor, eligible to vote, and your client would like to vote in favour of establishing the Scheme.||You do not need to take any action. We will vote in favour of establishing the Scheme as your client’s authorised representative|
|Your client is a Scheme Creditor, eligible to vote, and your client would like to vote against establishing the Scheme.||You need to place your client’s vote before the Deadline by emailing us at LFWEIF.VOTEAGAINST@abrdn.com with your client’s Wrap Account Number, beginning ‘WP’ or Elevate Account Number, beginning ‘EL’ or Fundzone Account Number, beginning ‘SP’. We will place this vote on your client’s behalf as your client’s authorised representative.|
|Your client is not eligible to vote because the product provider is the Scheme Creditor in respect of the product(s).||You do not need to take any action. The product provider will vote in favour of establishing the Scheme.|
How do I know which clients have been impacted?
For clients on the Wrap/Fundzone platforms - you can view your clients who hold these units on the Wrap/Fundzone platforms by generating a Total Holdings Report. For more information view Business level data and reporting | Adviser Help | abrdn.
For clients on the Elevate platform – you can view your clients who hold these units on Elevate, by generating an Instrument Holdings Report which can be found under the ‘Business Management’ tab. For more information view Business level data and reporting | Adviser Help | abrdn.
What is the timetable?
For further details on the timetable visit here.
- Explore Link’s dedicated website. However, please do not vote through Link’s website. This is because we are placing the vote on your client’s behalf.
- Contact Link at 020 3991 0224 if you have any questions about the Scheme or the Fund’s suspension.
- Contact us if you have any questions about the Vote at LFWEIF.VOTEAGAINST@abrdn.com