Bridgecorp and advisers

While talking to advisers at the IFA Conference last week it started to dawn on me one of the reasons why Bridgecorp fell over. The picture that began forming after the first day is that it was the advisers themselves which triggered the collapse. Why? Well it appears that in the months prior to the collapse, many advisers started to stop putting money into the firm. This funds flow drought, combined with borrowers not paying the company, led to the inevitable liquidity crunch. No money in, no money out to make interest payments. (This in itself raises questions about how the company was being run). While this picture was one which formed quite quickly, it was brought home to me when a gentleman, who shall remain nameless but used finance companies extensively, said, "we brought the company down" (or words to the effect). On enquiry this was the royal we (advisers, not his company). So in the end, it seems, advisers where the catalyst for the collapse. That brings me to a point which needs clarification. A news item in one of the weekend papers quoted the IFA ceo David Hutton as saying not much of the money in the company came from advisers. This is patent rubbish. Sources inside Bridgecorp say 60-70% of the money raised came through advisers. Some of the biggest supporters are high profile and senior members of the association. One report (unconfirmed) is that a large firm had up to $50 million in the company; many others had amounts of around the $5 million mark.