The founder of BlackBee, the Cork investment group whose key arms have succumbed to liquidation over the past three years, claims liquidators failed to exhaust all assets available to investors in a property-backed bond before declaring that investors could access a special compensation fund.
David O’Shea, the founder, warned in a letter to the Investor Compensation Company DAC (ICCL) last week that if it proceeds with compensating investors in the bond without exhausting all available assets, he will apply to the High Court for leave to seek a judicial review.
The liquidators said they “reject outright” the contents of O’Shea’s letter.
Luke Charleton and Alan Large of EY, the liquidators of the various BlackBee entities, wrote last month to investors in Blackrock Office Bond II – which raised over €11 million in 2019 to buy Block 2 at Blackrock Business Park in south Co Dublin – saying they were entitled to compensation from ICCL.
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It was the first BlackBee investment to be classified as a so-called compensatable event. The maximum payout for ICCL-eligible claims is 90 per cent of the compensatable loss, up to a cap of €20,000.
O’Shea noted in his letter to ICCL that the property had been sold by a receiver for €8.75 million in August 2024, resulting in a net €5.88 million being transferred to the liquidators. That was after a loan from a property company associated with wealth manager Warren Private, called Futuredale, was repaid.
Meanwhile, the liquidators said in letters to investors that a total compensatable loss of €4.25 million had occurred. This comprised loan repayments and interest received by City Quarter Capital II, a bond issuance vehicle within the BlackBee group, that was not made available for distribution to the Blackrock Office Bond II investors.
However, O’Shea claimed in his letter to ICCL that Blackrock Office Bond II had recourse to between €3 million and €4.5 million of additional “super senior” collateral held by City Quarter Capital II, to protect investors in the product against property shortfalls. This was secured against a portfolio of unencumbered healthcare properties, which a receiver has been actively selling down, he said.
“The combination of physical sale proceeds (€5.878 million) and additional assets (the €3 million–€4.5 million) yields a recovery in the range of 80-95 per cent of notional noteholder capital,” he said.
O’Shea said the ICCL should not be paying compensation “while millions of euro in registered collateral sit uncollected in the hands of an active receiver”.
He also alleged that BlackBee’s core IT system, Hive, which held investment records, had been decommissioned after BlackBee Investments, the group’s Central Bank-regulated entity, went into liquidation in May 2023. He said this led to “data corruption” until Hive was recommissioned last September.
“We reject outright the contents of Mr O’Shea’s letter,” EY Ireland said in a statement on behalf of the joint liquidators.
O’Shea and Carl Dillon, an accountant and adviser to O’Shea, will be examined in early November in the High Court on the affairs of the BlackBee entities in liquidation.
BlackBee Investments had about €180 million of client assets when it was put into liquidation.
“The joint liquidators have returned over €30 million to investors to date. Investors are informed directly of the status of their investment. The joint liquidators will continue to work with asset owners, other receivers and liquidators to realise assets and to return funds to investors,” EY said.
