During the last year, the Armstrong Watson Restructuring and Insolvency team has been involved in a number of cases with an International element to them. Clearly, this brings additional challenges such as variances in legislation, working patterns and not to mention differing languages!
The following examples showcase the work of the Armstrong Watson’s Restructuring and Insolvency team:
Not your usual business sale
As you may recall, Mark Ranson, Mike Kienlen and Daryl Warwick were appointed as Joint Administrators over the Penman companies at the end of August 2016.
One of the entities we were appointed over, Penman Engineering Holdings Limited, was the intermediate holding company and held 100% share holding in Aardvark Holdings Limited (“Aardvark”). Aardvark owed 100% of the share capital of Aardvark Clear Mine Limited (“Clear Mine”), a company which as its name suggests manufactured and designed land mine clearance machines. The machines produced by Clear Mine are widely regarded as the most effective landmine clearance system in the world.
Despite the insolvency of other companies within the groups, neither of the companies were insolvent and held sufficient cash to enable them to continue to trade in the immediate short term. Since the successful sale of the share capital in Aardvark would generate funds into the Administration of Penman Engineering Holdings Limited, the Joint Administrators were keen to keep Aardvark and Clear Mine outside of an insolvency procedure in order that they could pursue their solvent sale.
Once the Joint Administrators had completed the sale of Penman Engineering Limited in November 2016, their attention then turned to how best to maximise the value of the share capital in Aardvark. The directors of Aardvark had already been generating awareness of the business and the Joint Administrators agreed to the engagement of a specialist consultant to over see and facilitate the sale.
Following the efforts of the directors and consultant, expressions of interest were received which ultimately resulted in the Joint Administrators entering into formal negotiations for the sale of the Aardvark share capital.
There were a number of hiccups and stumbling blocks along the way, including a delay to the sale for Ramadan in the purchaser’s home country. However, the Joint Administrators were able to agree the sale of the shares to Menasat Gulf Group.
It is therefore with much relief to all involved that the deal finally completed at 7pm on Thursday 27 July 2017.
Local Case with International Implications
In late January 2017, Mike Kienlen and Mark Ranson were appointed Joint Administrators of a brake part distributer based in Bramley, West Yorkshire (“B Ltd”). B Ltd had been trading since the mid 1980’s and specialised in the supply and distribution of automotive brake related parts and friction technology items.
B Ltd operated a large warehouse which held vast levels of stock, the majority of which were supplied by two companies based in China and who were also the largest unsecured creditors. The UK agent for the two companies had been in regular communication with the Restructuring, Recovery & Insolvency team throughout the pre-appointment planning period due to the level of their claims.
The Joint Administrators decided to trade B Ltd for a short period to allow for the disposal of all stock including that supplied by the two Chinese companies.
The Restructuring, Recovery & Insolvency team worked closely with the UK agent in respect of the Chinese suppliers’ Retention of Title (“ROT”) claim. Legal advice was obtained by the Joint Administrators to verify the two ROT claims and a lengthy stock taking process was undertaken (items ran into several thousand).
Following a period of marketing, the Joint Administrators entered into negotiations with a company based in Ireland regarding the sale of stock. A deal was subsequently agreed and the Joint Administrators, with the assistance of their agent and B Ltd’s remaining staff, to facilitate the transportation of over 30 lorry-loads of goods to the purchaser in Ireland.
The success of the sale will ensure a dividend distribution to the preferential and unsecured creditors of B Ltd.
Investigation into alleged overseas fraud
In a recent but ongoing case, Mark Ranson and Daryl Warwick were appointed Joint Liquidators of a UK finance broker (“C Ltd”), the members of which were based in the UK, Isle of Man and British Virgin Islands. The major creditor of C Ltd was a shopping centre located in Berlin owed in excess of €1.2m. The shopping centre had been declared insolvent in 2009 and a German Insolvency Administrator was appointed by the Court.
Following the Insolvency Administrator’s appointment and their subsequent review of the company’s files it was alleged that C Ltd had fraudulently invoiced the shopping centre for services not provided. The Insolvency Administrator subsequently lodged a claim for restitution against C Ltd. Judgement was duly granted with C Ltd being ordered to repay the outstanding sum. In the absence of any payments, C Ltd was wound up following a further Court application.
Despite the Directors failure to provide any books and records, the Armstrong Watson Restructuring and Insolvency team were able to trace a London property following a forensic review of the C Ltd’s bank statements. The statements showed large payments to a firm of solicitors and after further enquiries, it became clear that the funds had been used to part purchase the London property via an Isle of Man registered company.
Contact the Armstrong Watson Restructuring, Recovery & Insolvency team for more information on the recent deals
