Dispute at Pillings

[boathunter]

Perhaps QMP pay PLM to manage the marina rather than lease it to them. A way of shifting yet more money (on paper) from QMP to PLM.

 

Suck QMP dry, make QMP liable for everything and let it die owing lots of money. Marina business still trades, investor's money safe.

 

Also make QMP own the freehold so if anyone considering letting it run up a debt, they're put somewhat at ease as it's the marina owner rather than a management company with no assets. You might have it at the back of your mind that if push came to shove, there was a Marina's worth of cash there and your £180k was quite safe.

 

Transco at one point owed me, a one man band at the time, £50K. I didn't worry, I knew (or thought I knew) I'd get it eventually. I didn't feel it neccessary to check them out.

Edited February 24, 2014 by boathunter

[tupperware]

 

[Abbreviated Accounts Image]

 

 

 

 

Richard

 

RLWP - many thanks for posting this.

 

As these accounts are the abbreviated version then they are, not surprisingly short on detail although they are adequate for filing at Companies House for a small company whose turnover falls below the appropriate amount. Limited companies of whatever size are required, however, to file full accounts with HMRC and these accounts would contain details of income/expenditure which is the real meat we are lacking.

 

I assume that QMP did have an income stream as without this is unclear how they would be able to meet the interest payments to the Steadmans nor have any cash with which to pay CRT although we know, in practice, that the latter has not taken place. It has been reported that the director of QMP made an offer some weeks/months ago to make a reduced payment "in full settlement" of the outstanding debt although CRT were, not surprisingly, unwilling to accept this. In order for this offer to have been genuine then QMP must, at that time, have been in possession of sufficient funds to cover the offer.

 

Whilst we do not have the benefit of access to tan income/expenditure statement for the financial period, HMRC will certainly have this filed away and it would be most odd were an IP not have access to the original documents submitted by QMP. Without such access, the IP would be unable to determine whether there had been any "unfair preference" shown to one creditor over another, an important part of their duties.

 

The question occurs as to whether QMP ever accrued sufficient monies to enable it to repay CRT in full. If it did not then it would be unable to meet this debt obligation which first fell due some months ago and would, at that time, have been technically cashflow insolvent. On the other hand if monies had been accrued to pay CRT then they would appear to have departed in some other direction.

 

CRT are not stupid and will, I am sure, be in communication with the IP about such matters.

[tupperware]

Perhaps QMP pay PLM to manage the marina rather than lease it to them. A way of shifting yet more money (on paper) from QMP to PLM.

 

Suck QMP dry, make QMP liable for everything and let it die owing lots of money. Marina business still trades, investor's money safe.

 

Also make QMP own the freehold so if anyone considering letting it run up a debt, they're put somewhat at ease as it's the marina owner rather than a management company with no assets. You might have it at the back of your mind that if push came to shove, there was a Marina's worth of cash there and your £180k was quite safe.

 

Transco at one point owed me, a one man band at the time, £50K. I didn't worry, I knew (or thought I knew) I'd get it eventually. I didn't feel it neccessary to check them out.

 

If QMP leased the marina to PLM then revenue would accrue to QMP. If QMP were paying PLM to manage the marina then revenue would accrue to PLM. Quite what QMP would gain from this is unclear unless they also received income from PLM for the lease greater than the sum they paid to PLM in "management charges". As the site is QMP's only asset and the value of leases there only income, this would ensure that they became insolvent almost immediately and yet they have continued to exist for some years. QMP's creditor list includes a debt to PLM of some £1.6 million which would imply that, over a six year period, QMP's excess of expenditure over income in respect of its dealings with PLM was running at an average of at least £250,000 a year which does seem high when one considers the relative business interests of the two businesses. With expenditure of this size and a limited income stream then it is questionable as to whether QMP would ever have been in a position to pay CRT what it was owed.

1) This is the source of the intrigue here:

 

QUORN MARINA PROPERTIES LIMITED

NOTES TO THE ABBREVIATED ACCOUNTS

For the Year Ended 30 June 2009

1.2 GOING CONCERN

During the year an impairment provision of £1,344,520 was made on THE COMPANY'S FREEHOLD PROPERTY and as a result the company had a balance sheet deficit of £1,739,563 on the 30 June 2009.

The accounts have been prepared on a going concern basis on the understanding the the parent company, other group company and M Steadman will continue to financially support the company until sufficient future rental income is received to repay them.

 

2). I would suggest that the reason that the long term liability to Steadman hasn't altered is that it's set up as a fixed, interest only mortgage. It may have been JL that disclosed (who else would know?) that regular payments of £10,000 were being made by QMP to MS. If this was interest, it would not be an unreasonable rate on £2.75m.

 

What gets me (and a lot of other people on here) is what the hell kind of lease agreement exists between QMP and PLM?

If it were a normal, arms length transaction between a landlord and lessee it would be for a set term and rent. If the lessee had insufficient income from moorers to pay the rent, why should the landlord need financially supporting by the tenant?

 

The sum you describe as an interest payment to the Steadmans would seem to have taken precedence over the debt which was building up during the period to CRT. The Steadmans have been paid and CRT has not. Does this represent preference for one creditor over another?

 

The page you linked to shows the last update time as now, which means it is dynamically generated by the website server, so we can't tell when the content was written. But is does say the service charge "is expected to be about £174 in 2012", which suggests the text was written late 2011/early 2012.

 

A bit more googling produces this page (http://www.abnb.co.uk/submenupages/with-mooring.html), which was last updated 30 January 2013 at 11.43. Note that the price is coming down - from £24,250 on the page below to £18,000 on the current version at http://www.abnb.co.uk/boat_pages/2336web/2336abnb.php?BoatID=2336 .

 

David. The advert you have posted is still accessible from the appropriate ABNB page and is, as you say generated by the webserver on request. it does still use the term "residential mooring" which, under the planning permission granted to the marina, is apparently not allowed. It that sense, therefore, the advert may well misrepresent the product on offer and if so would be of interest to the Advertising Standards Authority. It also refers to the marina as being "on the River Soar" which, whilst it is true at this time, may cease to be so in mid-April.

[Peter X]

Thank you to carpet wallah (see #3225) for answering a couple of my questions.

Clearly in 2009 PL (or Mr Steadman) was indeed keen to write down the value of QMP's freehold, because even in the recession that impairment provision was excessive.

I should have realised that the constant debt to Mr Steadman of £2,750,000 was because the mortgage is interest only, and yes £10,000 per year would make sense then. Oops.

My guess is that any rent paid by PLM to QMP, the "rental income" which the 2009 accounts say was to be used to pay off the £1.6m owed to PLM, just went out again as a dividend to QMH, then on as a dividend into the QMH shareholder's pockets (75% to Steadman, 25% to Paul Lillie). CRT? Nah, we don't need to pay them.

John Lillie thinks the £1.6m QMP owes PLM is the development cost; the original shareholders of PLM (Steadman, John Lillie, Paul Lillie) put up half that, PLM sold some leases to raise more, and some other income (sorry I've forgotten what!) made up the remainder. PLM spent that money converting the gravel pit into a marina and building the cafe+flat, and QMP as freeholder owes PLM £1.6m for the building work. So far it's just like having a builder put an extension on your house and quite legitimate. But PLM kindly agrees to wait ages for payment, and 6 years later hasn't been paid a penny of it; that doesn't sound like any builder I've ever met. Then, despite the marina work clearly enhancing the land, its value is wildly written down in 2008-09.

Still trying to work out the endgame, but I feel like speculating. Steadman as the major creditor (via QMH and PLM) gets to choose the liquidator, but the liquidator must stay within a code of practice, and Steadman may not have anticipated that CRT would take a tough line. Without a NAA, PLM is probably unprofitable. Mooring fees slow to a trickle, some moorers start suing for breach of contract, the boat repair business can't pay, the cafe trade suffers as the appearance of the marina declines. The liquidator can't trade out of trouble, so he terminates PLM's lease and tries to sell the freehold unencumbered by Paul Lillie. Two scenarios here:

1. Someone pays just under £3m for it, Steadman's loan is paid off and the unsecured creditors get little or nothing. The new owner negotiates a NAA then tries to make his marina work, weighed down at first by having 20 long term leaseholders and some annual paid moorers who CRT might insist on protecting as a condition of the NAA.

2. If no-one wants it at that price, Steadman gets the site but it's not much good to him. He can't get permission for housing, and without a NAA it's just a cafe and flat and a few fed-up boaters. The CRT won't trust him with a NAA unless he coughs up the whole debt and pays in advance in future, and even then boaters are not keen on a marina with a bad reputation. Maybe he sells it off for £2m or so, but he has probably done OK out of it over the years.

[mayalld]

Thank you to carpet wallah (see #3225) for answering a couple of my questions.

Clearly in 2009 PL (or Mr Steadman) was indeed keen to write down the value of QMP's freehold, because even in the recession that impairment provision was excessive.

 

It might be regarded as excessive. Alternatively, it might be suggested that it indicates an optimistic valuation existed before then.

 

If we unravel what has gone on here;

 

1) M Steadman put up a sum of money to buy the PLM site, through one of his companies (did another company do the gravel extraction??)

2) Steadman and Lillie put up the money to develop the site as a marina, through a different company (PLM) that leased the site. As a tenant making improvements, the landlord owed the money to the tenant. One presumes that the debt was to be repaid by discounting the payments due from the tenant (PLM) to the landord (QMP).

3) Having built a marina, that marina has a value that is different from the purchase price plus build cost. The value is largely dependent upon the capacity for income generation. As we have seen that they forgot about VAT and assumed 100% occupancy, it is clear that once VAT and 70% occupancy come into play, the value of the marina is not what it was imagined to be.

[tupperware]

 

It might be regarded as excessive. Alternatively, it might be suggested that it indicates an optimistic valuation existed before then.

 

If we unravel what has gone on here;

 

1) M Steadman put up a sum of money to buy the PLM site, through one of his companies (did another company do the gravel extraction??)

2) Steadman and Lillie put up the money to develop the site as a marina, through a different company (PLM) that leased the site. As a tenant making improvements, the landlord owed the money to the tenant. One presumes that the debt was to be repaid by discounting the payments due from the tenant (PLM) to the landord (QMP).

3) Having built a marina, that marina has a value that is different from the purchase price plus build cost. The value is largely dependent upon the capacity for income generation. As we have seen that they forgot about VAT and assumed 100% occupancy, it is clear that once VAT and 70% occupancy come into play, the value of the marina is not what it was imagined to be.

 

If Steadman and Lillie did indeed advance the funds to develop the site then presumably PLM's accounts will show this liability - do they?

 

If it usual for a landlord to reimburse a tenant for such an investment? Would such a scheme apply, for example, apply where the owner of a out-of-town site decided to develop a retail park? I think it far more likely that the owner would seek their own source of finance rather than effectively "borrow" the entire werewithal from businesses he hoped to attract.

 

I have seen previous posts referring to the issues regarding VAT. Did PLM forget to charge this on mooring fees or merely forget to pass this to HMRC?

[dor]

As I understand it, before young Paul started pissing people off the marina was substantially full. With mooring fees and te extras like the cafe, workshops and sales of gas, electricity etc the marina must have had a gross income approaching £1 mil, if not more. Where did all the money go?

[tupperware]

As I understand it, before young Paul started pissing people off the marina was substantially full. With mooring fees and te extras like the cafe, workshops and sales of gas, electricity etc the marina must have had a gross income approaching £1 mil, if not more. Where did all the money go?

 

Follow the money.

[RLWP]

I'm not entirely sure on this - on the subject of misleading information in adverts, isn't it Trading Standards that are the relevant people, not the ASA

 

Richard

[tupperware]

 

It might be regarded as excessive. Alternatively, it might be suggested that it indicates an optimistic valuation existed before then.

 

If we unravel what has gone on here;

 

1) M Steadman put up a sum of money to buy the PLM site, through one of his companies (did another company do the gravel extraction??)

2) Steadman and Lillie put up the money to develop the site as a marina, through a different company (PLM) that leased the site. As a tenant making improvements, the landlord owed the money to the tenant. One presumes that the debt was to be repaid by discounting the payments due from the tenant (PLM) to the landord (QMP).

3) Having built a marina, that marina has a value that is different from the purchase price plus build cost. The value is largely dependent upon the capacity for income generation. As we have seen that they forgot about VAT and assumed 100% occupancy, it is clear that once VAT and 70% occupancy come into play, the value of the marina is not what it was imagined to be.

 

A further thought occurs.

 

The site, whatever its book value might be, now has some nice shiny buildings on it and there has been speculation that these were financed by monies loaned by PLM to QMP and is represented by the £1.6million included in the creditor's statement. This development, however it was financed, certainly makes the site a rather more attractive proposition as a marina. A court ruling in another case has appeared to establish that a commercial lease can be declaimed by a liquidator should this improve the returns from an asset sale. In the matter of the marina, the IP would seem empowered to give PLM notice to quit should he/she so choose and, as an unsecured creditor, PLM would receive only a proportion of those monies received from the sale of the site which remained after liquidating the debt to the Steadmans. This would only, of course, be possible were a sale of the asset to achieve more than the outstanding debt to the Steadmans but this outcome would leave any new owner with a site which has benefitted from some fairly expensive infrastructure investment and one totally unencumbered by leasehold obligations.

 

If my lottery numbers would only come up I might even be interested myself.

I'm not entirely sure on this - on the subject of misleading information in adverts, isn't it Trading Standards that are the relevant people, not the ASA

 

Richard

 

The ASA do indeed have the major role in policing adverts and have enjoyed some high profiles successes in recent times. Their website clearly indicates that their remit covers advertisements in the printed media and on the web and describes how complaints can be submitted to them and how they establish a contact point who can then discuss the complaint with whomsoever has submitted it. ABNB may not, of course, have written the copy on which the advert is based although they would naturally be the first port of call were such a complaint submitted to the ASA and investigated by them.

Edited February 25, 2014 by tupperware

[RLWP]

The ASA do indeed have the major role in policing adverts and have enjoyed some high profiles successes in recent times. Their website clearly indicates that their remit covers advertisements in the printed media and on the web and describes how complaints can be submitted to them and how they establish a contact point who can then discuss the complaint with whomsoever has submitted it. ABNB may not, of course, have written the copy on which the advert is based although they would naturally be the first port of call were such a complaint submitted to the ASA and investigated by them.

 

That deals with the advert, surely the issue is selling something that they are not able to - a residential mooring. That's a matter for Trading Standards

 

Richard

[tupperware]

As a matter of interest, have PLM issued any official statement to the moorers at the marina concerning how they intend to address the problems which CRT's proposed action, now little more than six weeks away, will pose?

[johnlillie]

If Steadman and Lillie did indeed advance the funds to develop the site then presumably PLM's accounts will show this liability - do they?

 

If it usual for a landlord to reimburse a tenant for such an investment? Would such a scheme apply, for example, apply where the owner of a out-of-town site decided to develop a retail park? I think it far more likely that the owner would seek their own source of finance rather than effectively "borrow" the entire werewithal from businesses he hoped to attract.

 

I have seen previous posts referring to the issues regarding VAT. Did PLM forget to charge this on mooring fees or merely forget to pass this to HMRC?just to put the record straight, the issue of "overlooked VAT" was only made on the initial business plan, once we started trading, VAT was always catered for.

[tupperware]

 

That deals with the advert, surely the issue is selling something that they are not able to - a residential mooring. That's a matter for Trading Standards

 

Richard

 

Thanks RLWP. You may well be right and submitting any concerns as to whether what is up for offer might be being misrepresented to both the ASA and Trading Standards might be a smart move.

[johnlillie]

if the money raised from leases was paid to QMP( a reasonable assumption now that the lessees are shown as unsecured creditors of QMP) , how can QMP owe PLM that money?

[tupperware]

 

If Steadman and Lillie did indeed advance the funds to develop the site then presumably PLM's accounts will show this liability - do they?

 

If it usual for a landlord to reimburse a tenant for such an investment? Would such a scheme apply, for example, apply where the owner of a out-of-town site decided to develop a retail park? I think it far more likely that the owner would seek their own source of finance rather than effectively "borrow" the entire werewithal from businesses he hoped to attract.

 

I have seen previous posts referring to the issues regarding VAT. Did PLM forget to charge this on mooring fees or merely forget to pass this to HMRC?just to put the record straight, the issue of "overlooked VAT" was only made on the initial business plan, once we started trading, VAT was always catered for.

 

 

Thank you John for clearing up that point.

if the money raised from leases was paid to QMP( a reasonable assumption now that the lessees are shown as unsecured creditors of QMP) , how can QMP owe PLM that money?

 

I'm not sure that they do although, the wheel having fallen off QMP, it is a moot point as to how PLM are to service any obligations they might have assumed to those leaseholders whose leases now provide no security of tenure.

[MtB]

As a matter of interest, have PLM issued any official statement to the moorers at the marina concerning how they intend to address the problems which CRT's proposed action, now little more than six weeks away, will pose?

 

ISTR a moorer posting an email here from PL to all moorers, stating something along the following lines.

 

QMP is going bust due to a administrative misunderstanding but not to worry because a QMP2 was being formed to replace it, a new NAA was being negotiated and a seamless handover was therefore guaranteed with no interruption of service to the moorers.

 

I'll have a look back and see if I can find it.

 

 

MtB

[MtB]

As a matter of interest, have PLM issued any official statement to the moorers at the marina concerning how they intend to address the problems which CRT's proposed action, now little more than six weeks away, will pose?

 

 

Yes, and posted on this forum by Paul Lillie himself!

 

See post 123.

 

"Dear Forum, here is the response to our berth holders and I'm certain that matters will be resolved in the coming weeks;

 

Dear Berth Holders

 

As an update from yesterdays correspondence I would like to let you know that we have had legal advice on the letter sent to you by Phil Spencer on 16^th January 2014.

 

I can confirm that Para. 4 of Mr Spencers Letter stating that our agreements have been terminated , actually means there is no agreement in place. Therefore there is no requirement for Quorn Marina Properties Ltd to disconnect the access to the Canal.

 

I can assure you we will have any other matters resolved over the coming months and again apologise that you have been subjected to a letter that is partly inaccurate and from a very biased perspective. The letter does not detail that any new company stepping into the role of the prior company has the right to a connection to the waterway which cannot be unreasonably withheld, therefore we do not expect any of your services to be affected.

 

If you have any further queries please do not hesitate to contact me & if it is after office hours please do feel free to call me on my mobile – 07747 047740.

 

Yours sincerely,

 

Paul Lillie

Managing Director

Pilling's Lock Marina Ltd

Flesh Hovel Lane - Quorn - Leicestershire - LE12 8FE

tel -

01509 620990 / fax - 084555 76587

 

MtB

[DeanS]

As I understand it, before young Paul started pissing people off the marina was substantially full. With mooring fees and te extras like the cafe, workshops and sales of gas, electricity etc the marina must have had a gross income approaching £1 mil, if not more. Where did all the money go?

 

a better questions is....

 

If it was making that much money...why oh why would they risk it all, just to save £180 000....and in the process see leaseholders losing thousands of pounds. Something's fishy.

[MtB]

 

a better questions is....

 

If it was making that much money...why oh why would they risk it all, just to save £180 000....and in the process see leaseholders losing thousands of pounds. Something's fishy.

 

Bloody hell Dean, no flies on you, are there?!!!

 

This is roughly what the last 3,000 posts are trying to figure out.

 

 

MtB

[Phantasm]

"Steadman put up the £2.6m to buy the site (mortgage)", this is from a post from John Lillie about no. 2000.

 

I distinctly remember being at a meeting in the café bar at the start of the marina when Paul Lillie stated that the marina had a £x million pound mortgage from NatWest. Which means that PL has lied to moorers from the beginning.

[DeanS]

 

Bloody hell Dean, no flies on you, are there?!!!

 

This is roughly what the last 3,000 posts are trying to figure out.

 

 

MtB

 

LOL.

Just stating the obvious, in case someone missed it....hehe

[Tim]

Reading all this puts the words Challenger and Ownerships to the front of my mind.

[tupperware]

 

 

Yes, and posted on this forum by Paul Lillie himself!

 

See post 123.

 

"Dear Forum, here is the response to our berth holders and I'm certain that matters will be resolved in the coming weeks;

 

Dear Berth Holders

 

As an update from yesterdays correspondence I would like to let you know that we have had legal advice on the letter sent to you by Phil Spencer on 16^th January 2014.

 

I can confirm that Para. 4 of Mr Spencers Letter stating that our agreements have been terminated , actually means there is no agreement in place. Therefore there is no requirement for Quorn Marina Properties Ltd to disconnect the access to the Canal.

 

I can assure you we will have any other matters resolved over the coming months and again apologise that you have been subjected to a letter that is partly inaccurate and from a very biased perspective. The letter does not detail that any new company stepping into the role of the prior company has the right to a connection to the waterway which cannot be unreasonably withheld, therefore we do not expect any of your services to be affected.

 

If you have any further queries please do not hesitate to contact me & if it is after office hours please do feel free to call me on my mobile – 07747 047740.

 

Yours sincerely,

 

Paul Lillie

Managing Director

Pilling's Lock Marina Ltd

Flesh Hovel Lane - Quorn - Leicestershire - LE12 8FE

tel -

01509 620990 / fax - 084555 76587

 

MtB

 

Admirably creative use of language which rather ignores Mr Spencer's point about CRT taking action themselves should QMP fail to comply with the notice issued to them by CRT. Were I one of the moorers involved I would find the statement less than reassuring and one wonders how many of those present took the same view.

 

I was aware of this statement and my post was really concerned with any later statement which may have been made by PLM.

 

ISTR a moorer posting an email here from PL to all moorers, stating something along the following lines.

 

QMP is going bust due to a administrative misunderstanding but not to worry because a QMP2 was being formed to replace it, a new NAA was being negotiated and a seamless handover was therefore guaranteed with no interruption of service to the moorers.

 

I'll have a look back and see if I can find it.

 

 

MtB

 

Thanks MtB. I must say that the British reputation for understatement is well evidenced if the small matter of a sum north of £3million represents nothing more than an "administrative misunderstanding".

[costalot]

 

Admirably creative use of language which rather ignores Mr Spencer's point about CRT taking action themselves should QMP fail to comply with the notice issued to them by CRT. Were I one of the moorers involved I would find the statement less than reassuring and one wonders how many of those present took the same view.

 

I was aware of this statement and my post was really concerned with any later statement which may have been made by PLM.

 

Thanks MtB. I must say that the British reputation for understatement is well evidenced if the small matter of a sum north of £3million represents nothing more than an "administrative misunderstanding".

Well you wouldn't actually expect him to kill the goose that keeps laying the golden eggs. As long as the boaters stay the money keeps rolling in!