Letters went out to investors on Monday 1 October confirming that an "initial capital distribution of approximately 43.5% of the total investor funds" would be paid on Friday 5 October.
A statement from Connaught said: “At a meeting of the directors of Connaught Asset Management (Guernsey) Limited on the 1st October 2012 it was confirmed that an initial capital distribution of approximately 43.5% of the total investor funds is to be paid to investors in the Connaught Income Fund Series 2."
Michael de Jersey, the chairman of Connaught Asset Management, said the board was "pleased" it was now in a position to release some of the investors’ capital.
And he added: "The orderly wind-down of the fund to date had permitted this significant capital redemption.”
This is the first payment back to investors and Connaught said more will be returned as the wind-down process continues and Series 2 loans are redeemed. The Fund said it "prefer not to speculate on the total value to be returned".
The last loan redemption date in the Series 2 Asset Schedule is due to be April of 2013.
In theory the wind down will be complete by then but this could be subject to delay where a security has to be realised through possession proceedings, which can delay redemption.
Connaught Asset Management Ltd and Connaught Asset Management (Guernsey) Ltd are two different companies.
The latter is not in administration which is why the wind-down of Series 2 is progressing while the former entered administration on 18 September 2012.
Bridging lender Tiuta also entered administration on the 21 September.
It comes five months after Connaught's decision to wind down Income Fund Series 2 which then supplied Tiuta with part of its funding lines. In March this year Connaught decided to suspend Income Fund Series 1 which was Tiuta's other major funding line and in June a third Connaught fund was forced to close as investors pulled their money out.
In April this year the FSA issued a note to investors in Connaught Income Fund Series 1 after it failed to pay the scheduled quarterly interest payment on 13th April 2012. The FSA originally laid out its concerns about the fund in May last year warning it was misleading investors. But before this Tiuta suffered a spate of high profile departures in 2011 when former chief executive, George Patellis, left the company at the end of February followed in April by Guy Garrard, head of business development, Stuart Brumhill, head of marketing, and regional account managers Gordon Rae and Jim Baker.
In May that year Tiuta's head of operations Anita Kirkbright and redemptions manager Debbie Cowlard also left the short-term lender and Gareth Lewis quit Tiuta last year after just four months to join rival bridging lender Precise Mortgages.
