The 79th Group Loan Notes- Troubling Security Trustee Issues

As The 79th Group suspends redemption and interest payments on its loan notes and ceases to respond to concerned investors, scrutiny is intensifying over the robustness of the legal protections supposedly in place. In particular, many loan note holders are now turning their attention to the Security Trustee arrangements . Their supposed safety net – only to find serious cause for concern.

Insolvency & Law (I&L) has conducted a detailed review of the relevant documents and Companies House filings. What we’ve uncovered raises significant doubts about the effectiveness of the security arrangements surrounding these investments. This article highlights two central issues:

1. The questionable strength of the T&T Trustees Debenture Deed.
2. The confusing and unresolved presence of Castle Trust & Management Services Ltd (CTMS} (now in liquidation) as Trustee on certain charges.

Our findings underscore the urgent need for investors to understand the risks, assert their rights, and, where necessary, pursue collective legal remedies. What follows is a breakdown of the critical failings and ambiguities that may limit recovery options for those holding 79th Group loan notes.

Issue 1: Key Weaknesses in the T&T Trustees Debenture Deed

To understand the degree of protection offered to investors, Insolvency & Law reviewed a Debenture Deed lodged by T&T Trustees for 79th Luxury Living Six Limited . One of several companies under the 79th Group umbrella that has issued fixed-income loan notes to retail investors.

This particular deed, certified as a charge by JMW Solicitors LLP and registered at Companies House, is broadly representative of the documentation in place for many 79th Group entities. (Excluding 79th Commercial Three Limited and 79th Luxury Living Five Limited, which are addressed later).

What emerged from our review is deeply troubling. The deed appears riddled with structural and legal weaknesses that could severely undermine its function as a genuine safeguard.

Lack of Specificity in the Charge Details

The deed fails to clearly identify the actual properties or assets over which the charge applies. This vagueness limits investors’ ability to verify that any meaningful security backs their investment. In legal terms, a charge without specificity lacks teeth. If investors can’t prove what has been secured, enforcement becomes uncertain at best and impossible at worst.

More concerning is the reliance on a floating charge. This applies to the general assets and undertakings of the company but allows the company to continue trading with those assets until the charge crystallises. This means that:

• The company may dispose of or encumber assets in the ordinary course of business.
• Asset value may be diminished or lost before loan note holders can assert a claim.
• In a worst-case scenario, the security may be exhausted or dissipated entirely before enforcement becomes possible.

This is a stark contrast to a fixed charge, which typically locks down specific assets and prevents them from being sold or transferred without lender consent.

Absence of Clear Enforcement Rights

The deed does not grant individual loan note holders the right to enforce the charge themselves. Any enforcement action appears to be solely at the discretion of the security trustee, T&T Trustees. This creates an inherent risk. If the Trustee fails to act—due to cost, conflict, negligence, or otherwise—investors have no direct recourse.

Additionally, the document lacks a clear set of enforcement triggers. There is no well-defined mechanism stating under which events the charge will crystalize. This makes it difficult to determine when (or even if) the Trustee must act to protect investor interests.

This absence of clear, enforceable rights leaves investors in a precarious position. Especially in a distressing scenario where swift action is essential.

Weak Protective Covenants

Covenants are meant to protect creditors by restricting certain actions the company can take with its assets. Yet, this debenture deed includes no meaningful restrictions on:

• Transferring or encumbering assets without loan note holder approval.
• Granting preferential security to other creditors.
• Incurring additional secured debt that could rank above or dilute the position of existing investors.

While a negative pledge is mentioned, it is poorly drafted and lacks the explicit language needed to prevent asset transfers or further borrowing. This exposes the security to potential erosion and subordination, further weakening investor recovery in an insolvency.

Limited Oversight and Accountability from the Trustee

One of the most alarming omissions in the T&T Trustees debenture deed is the lack of express duties and obligations imposed on the Trustee.

There is no indication that T&T Trustees must take proactive steps to protect loan note holders’ interests. There’s also no indemnity clause ensuring the Trustee can claim costs from the borrower for legal action taken on behalf of investors—an industry-standard provision that typically ensures a Trustee is resourced to act decisively when needed.

Without these protections and responsibilities in place, investors are left relying on a passive Trustee that has no clear obligation to intervene unless formally instructed—creating both delays and uncertainty.

Ambiguity in Legal Language

Throughout the document, key terms are undefined, ambiguous, or framed in generic legalese. This lack of precision could give rise to legal disputes over interpretation, further slowing any enforcement action and increasing litigation risk.

Importantly, there is no express clause establishing the priority of claims for loan note holders over other creditors. This omission introduces uncertainty about where loan note holders would stand in a formal insolvency—especially if other secured or preferential creditors emerge.

Certification Does Not Equal Protection

The charge is registered at Companies House and certified under the Companies Act 2006, but this certification is frequently misunderstood. It does not verify the substance or enforceability of the charge—it simply confirms that a document has been filed.

This creates a false sense of security for investors, who may assume that registration equates to protection. In reality, the deed may offer little to no protection in the event of a default or insolvency.

Issue 2: Confusion Around Castle Trust & Management Services Ltd and Unrecorded Trustee Appointments

A separate—but equally significant—concern arises in relation to 79th Commercial Three Limited and 79th Luxury Living Five Limited. Unlike other 79th Group companies, these two still list Castle Trust & Management Services Ltd (CTMS) as the registered Security Trustee, despite the company having entered Compulsory Liquidation by the Courts in Gibraltar in October 2023.

This creates a situation where the entity tasked with holding and enforcing the security on behalf of investors is itself insolvent.

Suspension of Payments and Trustee Communications

On 24th March 2025, The 79th Group issued a communication stating that it was suspending all loan note redemption and interest payments due to “reputational damage and financial risk” following actions by the City of London Police.

Following this, T&T Trustees Limited sent an email to certain loan note holders, confirming that they had been appointed as the new Security Trustee in place of CTMS, effective 1st December 2023—six months after CTMS was ordered in Administration by the Courts in Gibraltar.

The email stressed that T&T Trustees could only act on collective instructions from a Lenders Majority Group, but failed to provide:

• Any guidance on how to form such a group.
• Required thresholds or criteria for group formation.
• Contact details for further communication.

To make matters worse, the email was sent from a no-reply address, cutting off two-way communication at a critical time.

Deed of Assignment – But No Registration

T&T’s email references a deed of retirement and appointment, as well as a deed of assignment, as the legal instruments used to transfer security trustee duties from CTMS to T&T Trustees. However, these documents have not been filed or registered at Companies House, and loan note holders have not been provided with access.

This raises a serious legal question. Has the charge been validly assigned if it remains registered in CTMS’s name and the transfer documents are not publicly available?

Until such a transfer is clearly documented and registered, the legal standing of T&T Trustees may be uncertain. This potentially renders them unable to act—or vulnerable to challenge—in any enforcement action.

Legal Implications for Loan Note Holders

Taken together, these issues present a grim picture for investors in 79th Group loan notes. Whether the security trustee is inactive, unaccountable, or legally unrecognised, the result is the same. Lan note holders are left in a position of risk, uncertainty, and limited control.

Key Risks Include:

• The enforceability of the security may be invalid or significantly compromised.
• Investor protection is reliant on Trustees who lack clarity of duty or authority.
• Weak covenants and floating charges expose investments to asset dissipation.
• Without transparency, investors are unable to verify the true legal structure of their security arrangements.

What You Can Do Now

If you are a loan note holder affected by The 79th Group’s suspension of payments or the trustee-related issues discussed here, it is critical to act quickly. Delay could further reduce your ability to recover funds or protect your rights.

At Insolvency & Law, we are currently helping investors:

• Review and assess the legal validity of the security.
• Understand their options for group representation or individual action.
• Navigate the process of appointing or instructing a Lenders Majority Group.
• Pursue legal remedies that will lead  to enforcement and recovery of loan note holder funds.

Contact us now: [email protected]

If a Company Owes You Money…

Whether you’re dealing with The 79th Group or any other company that refuses to repay a legitimate debt, you don’t have to face the process alone. Our legal experts can help you explore your recovery options and act swiftly to protect your interests.

[email protected]