When a fund gets liquidated at the end of the fund’s life, a fund liquidator is responsible for ensuring that all financial obligations are addressed as entities are dissolved. This involves selling remaining assets, settling liabilities, distributing remaining proceeds to investors, and fulfilling legal and regulatory requirements.

Transaction services are essential to support successful fund wind-ups. In this blog, we explore the reason why traditional providers tend to be reluctant to service funds in liquidation and how Ebury can help funds overcome it.

Why traditional providers such as banks are reluctant to service funds in liquidation

Reluctance to service funds in liquidation stems from several reasons, which include heightened compliance risks, efforts required to mitigate reputational concerns, and limited financial upside:

Increased compliance requirements

Funds typically have complex ownership structures, which further increase when a fund enters liquidation. Also, the sporadic transaction pattern makes transaction monitoring challenging, This requires traditional providers to update client documentation frequently and monitor activity more closely.

Mitigating reputational concerns

If a fund in liquidation is not unlikely to encounter litigation, regulatory challenges, or public scrutiny, the bank may worry about its reputation loss due to an association with such a fund. In order to mitigate reputational risk, any transactional account provider will be required to perform an in-depth client assessment before servicing a fund in liquidation.

Limited financial upside

Servicing funds in liquidation is often not deemed commercially interesting for traditional providers due to the finite lifetime of the client relationship (only for the duration of the winding-up process) and a lower ability to cross-sell ancillary services like credit facilities.

While traditional providers’ reluctance to service funds in liquidation is understandable, it can pose challenges for liquidators who rely on their services to operate efficiently.

Why Ebury is the right choice for liquidators

Due to Ebury’s focused payment and cash management engine and specialisation in servicing institutional clients, Ebury is able to achieve a lower costs base in providing transactional services. The lower cost base enables us to service liquidators profitably and allow Ebury to invest in fulfilling the increased compliance and risk mitigation efforts required to service liquidators.

Ebury supports funds in liquidation by providing them access to transactional services. With a robust payment and cash management platform, compliance know-how and resources, we provide liquidators with transactional accounts, cash management solutions, and the payment platform for (international) distributions they require.

Ebury’s tailored solution for liquidators

Our all-in-one platform and unified capabilities make us well-positioned and a preferred partner for fund liquidators. Here’s how:

• Transactional accounts: Ebury offers transactional accounts in over 20 countries locally, enabling liquidators to hold, manage, and disburse funds in over 130 currencies.
• Secure online platform: Our robust online platforms enables clients to setup a tailored payment approval flow and securely hold funds.
• Reliable client onboarding: Our KYC specialists run the client onboarding process with a strong understanding of the liquidation space. This allows for reliable onboarding times, often completed within 2 weeks.
• Global payment: Due to our vast local and global currency capabilities, we can facilitate cross-border payments through local payment systems, thus increasing the speed and reliability of payments.
• Competitive FX and hedging solutions: Ebury’s expertise in foreign exchange allows liquidators to access competitive rates for international transfers. The platform also offers FX hedging, enabling liquidators to protect transactions from currency fluctuations.
• Dedicated account manager: We assign expert account managers to work closely with our clients, providing support during any operational challenges.

Let’s start a conversation

Get in touch with our experts to discuss the needs of your fund and how Ebury can help you. You can also visit our page to learn more about our solution.

Disclaimer

• Private Funds are serviced out of Ebury Partners Markets Limited, a MiFID Investment Firm authorised and regulated by the Financial Conduct Authority with reference number 784063. This is a high‑risk investment.
• The information provided herein is general in nature and should not be construed as financial or investment advice. The information provided here is not legally binding.
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• Ebury Partners UK Ltd is not a bank, but an Electronic Money Institution authorised and regulated by the Financial Conduct Authority.