FlowBank Liquidation: LCG Sale and Operations in the Balance

The liquidators of the bankrupt Swiss neobroker FlowBank have issued an updated circular to creditors, providing key updates on the ongoing proceedings. They are currently seeking a buyer for the bank‘s 100% stake in London Capital Group Limited (LCG), a UK-based FX and CFDs broker regulated by the FCA. At the same time, the liquidators, Walder Wyss, are preparing to shut down and discontinue LCG’s offshore business in the Bahamas, known as LCG Capital Markets Ltd, which operated under the FlowBroker brand.

FlowBank's bankruptcy was initiated by the Swiss financial regulator FINMA in mid-June. FINMA determined that FlowBank no longer met the minimum capital requirements necessary for its operations, raising concerns about the bank's financial stability.

FlowBank was established in 2020 by CEO Charles-Henri Sabet, who had previously run LCG. Initially, FlowBank focused on banking and investment activities, but it eventually shifted towards online CFD trading, revisiting its origins in LCGs business model. Notably, cryptocurrency investment firm CoinShares held a 30% minority stake in FlowBank.

Over the past few years, LCG has been managed by Dave Worsfold and Matt Basi. The unexpected bankruptcy of FlowBank led to a temporary license restriction for LCG by the FCA. However, LCG resumed normal operations in early July and has been operating as an introducing broker for the past year.

In addition to these developments, the liquidators provided further details about the bankruptcy proceedings. At the time of FlowBanks collapse, approximately 9,000 accounts held secured deposits totalling CHF 53.5 million. By August 23, 2024, the liquidators had reimbursed around 5,800 accounts, totalling CHF 45.0 million, or 84% of the secured deposits. The process of reimbursing the remaining 2,900 customers is still ongoing.

The liquidators also addressed a claim made by Charles-Henri Sabet concerning several Pop Art paintings located on FlowBanks premises, including an original Andy Warhol. After reviewing the claim and the supporting evidence, the liquidators concluded that Mr. Sabet's claim appeared well-founded.

The liquidation of FlowBank continues, with the focus on maximizing returns for creditors while winding down its remaining operations.