Dispute at Pillings

[David Mack]

I have previously asked whether anyone is aware of the IP's profession - accountancy or legal - do you know?

According to Smith Cooper's website :

 

"Dean Nelson is licensed in the U.K to act as an Insolvency Practitioner by the Institute of Chartered Accountants in England and Wales."

So he's an accountant.

 

You can see what he looks like here .

[Midnight Rider]

 

I have previously asked whether anyone is aware of the IP's profession - accountancy or legal - do you know?

 

Dean Nelson works for Smith Cooper, accountants of Nottingham who state ----

 

'Dean Nelson is licensed in the UK as an IP by the Institute of Chartered Accountants. When acting as Receiver, Administrative Receiver or Administrator, the affairs, business & property of the company is being managed by him'.

 

ETA ---- ah, beaten to it.

Edited March 30, 2014 by Midnight Rider

[Paul G2]

Writing off the still mysterious £1.6M debt is at the heart of this I think. Compared to that, the money owed to CRT is chicken feed. I can't figure it out, but could it be that CRT have been gratefully used as an excuse to wind up QMP and write this debt off?

If so and it is apparently the case that the triumverate were sure they would get another access agreement without too much fuss, Crt are being used as the whipping boy in an atempt to distract everyone from the main plan which is purely a writing off/tax dodging scheme somewhere in amongst all this. If it had/does work, replacing one company that did nothing at all other than gather paper debts with another that also does the same is quite clever. No loss of income, no problems for the marina in carrying on trading etc etc.

Somehow, someone is £1.6M tax free better off here.

 

I've been saying something similar since about page ten of this thread, it was one of the first things that jumped out to me about this scam. There could be some very significant tax savings that emerge from this liquidation. There is a whole lot of "paper debt" being written off here and surely Steadman (or some entity of his) is going to use that loss to shelter real income.

[Paul G2]

 

In my view, the responsible course would have been to act as any ordinary business would, and place the recovery of sums owed ahead of punitive warnings to other ‘clients’. Surely, in any event, a course of action that assured eventual payment would have been far more effective propaganda?

 

 

I should think that forcing the offending company to go into liquidation would send a strong and effective message, even if the IP were to trade his way out of debt. But this assumes that the companies and their contracts are structured in such a way that payment is actually possible. This does not seem to be the case with the Steadman/Lillie triumvirate.

 

The revenue stream for the triumvirate should be PLM (receives all income) -> QMP ->QMH. If this were a legitimate business scheme, with QMP receiving sufficient income from PLM to pay its bills, how on earth did QMP end up owing PLM £1.6million? That's the opposite of how it should be, one would think.

 

I should think that, if the IP were really interested in recovering the debt, he should be looking at the fraud aspects of this because showing fraud would allow him to go after Steadman and, if Steadman were personally liable, not only would everyone get paid, but that would send about the best message CRT could ever hope for. IMHO

 

ETA - a missing adjective.

Edited March 30, 2014 by Paul G2

[NigelMoore]

I should think that, if the IP were really interested in recovering the debt, he should be looking at the fraud aspects of this . . .

 

That's why I said earlier [#4839] "If there had never been any possibility that payments could be made from the possible income stream, then the issue is one of straightforward fraud on Pillings part . . ." It is one or the other – either it is/was possible to trade out of the debt or the arrangement was designedly fraudulent.

 

If it was possible to trade out, then the IP should; if not, then it is as you say, because in issues of crime, even where a party in the company merely knows what is going on and says nothing, they are equally guilty of the fraud as those actively working it, and can be pursued personally.

[boathunter]

 

I've been saying something similar since about page ten of this thread, it was one of the first things that jumped out to me about this scam. There could be some very significant tax savings that emerge from this liquidation. There is a whole lot of "paper debt" being written off here and surely Steadman (or some entity of his) is going to use that loss to shelter real income.

Yep I just thought I'd bring it up again. 3 linked companies, 2 doing just fine and one with millions of pounds of debt? A large chunk of the debt owed by one to another for no apparent logical reason and conveniently written off around the time they must have become aware that CaRT were about to take them to court. Probably just coincidence.

[johnlillie]

after 4857 posts, the issue of the £1.6m allegedly owed by QMP to PLM baffles even me, and I was there for the first 2 years or so. By some strange coincidence, that figure is more or less exactly what was put into the development fund by way of £800k from shareholder's input and approximately £550k from the sale of leases, plus earned income from March 2007 to March 2009, which were the approximate start and finish dates of most of the development. So if this money came from these sources and was used to build the Marina, How can it ever be owed to PLM? Where did PLM get the £1.6m from it "loaned" to QMP in the first place? The accounts I remember up to 2009 did not show any figures anywhere near this amount.

[tupperware]

[snip]

 

If PLM was paying salarie/s and the associated on-costs and benefits such as employer NI, health insurance,pension contributions etc. on behalf of QMP then presumably there would be inter-company cross charges made giving rise over time to QMP having a significant liability (on paper) to PLM.

 

Well, as there has been no announcement of wholesale redundancies by the IP of the workforce at the site then it is safe to assume that the employees are contracted to PLM who would, of course, be responsible for tax, insurance and other matters. You may be correct that these costs were then invoiced to QMP although it would be difficult to argue that QMP needed any workforce whatsoever as its role was mostly to hold title to the site. If, however, the intercompany charges you describe were a significant contributor to the large debt owed by QMP to PLM, then, given the extremely limited income stream which QMP were likely to have had, the question as to at what point QMP became insolvent does occur. The abbreviated accounts, dated I believe Jun 2012 and posted many pages back, contain a qualification to the effect that Mr Steadman intends to continue to support the company financially until such time as it moves into profit. That intention, which was central to the continued existence of QMP and fundamental to those accounts being a "true and fair" reflection of its financial position, had clearly ceased by early 2014 after which QMP entered liquidation in pretty short order.

after 4857 posts, the issue of the £1.6m allegedly owed by QMP to PLM baffles even me, and I was there for the first 2 years or so. By some strange coincidence, that figure is more or less exactly what was put into the development fund by way of £800k from shareholder's input and approximately £550k from the sale of leases, plus earned income from March 2007 to March 2009, which were the approximate start and finish dates of most of the development. So if this money came from these sources and was used to build the Marina, How can it ever be owed to PLM? Where did PLM get the £1.6m from it "loaned" to QMP in the first place? The accounts I remember up to 2009 did not show any figures anywhere near this amount.

 

JohnLillie. Are you aware of the VAT arrangements across the three companies and particularly were they registered as part of the same VAT group for intercompany invoicing?

[LoneWolf]

after 4857 posts, the issue of the £1.6m allegedly owed by QMP to PLM baffles even me, and I was there for the first 2 years or so. By some strange coincidence, that figure is more or less exactly what was put into the development fund by way of £800k from shareholder's input and approximately £550k from the sale of leases, plus earned income from March 2007 to March 2009, which were the approximate start and finish dates of most of the development. So if this money came from these sources and was used to build the Marina, How can it ever be owed to PLM? Where did PLM get the £1.6m from it "loaned" to QMP in the first place? The accounts I remember up to 2009 did not show any figures anywhere near this amount.

 

PLM paid for the development and recharged it to QMP

so in PLM books it is a debtor

 

QPM capitalised it (as they should) so it gets added to the value of land & buildings in the balance sheet and of course it sits in QMPs creditors as owing to PLM

 

It never gets paid

 

Then the land and buildings get revalued down as we saw in the accounts extracts earlier

QMP goes bust owing PLM

 

I'm not saying this did happen, just trying to explain how it could

[tupperware]

 

That's why I said earlier [#4839] "If there had never been any possibility that payments could be made from the possible income stream, then the issue is one of straightforward fraud on Pillings part . . ." It is one or the other – either it is/was possible to trade out of the debt or the arrangement was designedly fraudulent.

 

If it was possible to trade out, then the IP should; if not, then it is as you say, because in issues of crime, even where a party in the company merely knows what is going on and says nothing, they are equally guilty of the fraud as those actively working it, and can be pursued personally.

 

Quite so NigelMoore. The IP will, of course have access to the financial records from which the full accounts deposited with HMRC will have been prepared rather than the abbreviated accounts, available in the public domain, submitted to Companies House.

 

Your point regarding disclosure is an important one. If someone in a senior position within an organisation fails to disclose material facts regarding that organisation's trading position either to an external auditor or in self-certified accounts, they can be subject to all manner of legal sanction including disqualification and personal financial liability. I suspect, from one or two remarks made by Mr Spencer in his public statements, that CRT may not be quite as naïve as might appear.

 

PLM paid for the development and recharged it to QMP

so in PLM books it is a debtor

 

QPM capitalised it (as they should) so it gets added to the value of land & buildings in the balance sheet and of course it sits in QMPs creditors as owing to PLM

 

It never gets paid

 

Then the land and buildings get revalued down as we saw in the accounts extracts earlier

QMP goes bust owing PLM

 

I'm not saying this did happen, just trying to explain how it could

 

Well, I would have expected that the lease sales would have been invoiced by QMP as owners of the site although I have asked here on more than one occasion, without success, if anyone is able to confirm this. Furthermore, as JL's post makes clear, the majority of this debt seems to post-date the development itself. Lastly, is it usual for the tenants (PLM) of a site to recharge investment in the site to their landlord (QMP)?

[tupperware]

 

No-one seems to be answering this so I'll have a go.

 

I think every IP is a Chartered Accountant, not necessarily with a law qualification but certainly with a full knowledge of company law. My limited company was a creditor of an insolvent company in 2012, and I later asked my accountant, who has long experience with small to medium companies in a wide range of businesses and is now winding down to retirement by being very choosy about taking on new clients, whether he'd considered becoming an IP, given that their hourly fees are much higher than for normal accountancy work. His answer was that yes it's well paid and he could do it, but he wouldn't enjoy it because of the stress of dealing with the owners and creditors of failed businesses.

 

I think you're correct in thinking that the IP had no possibility of trading out of trouble with QMP, because he was obliged to give priority to Mr Steadman's charge over the freehold, and because the triumvirate was set up with PLM paying very little for its lease.

The latter must be so because otherwise QMP would not still owe PLM so much money.

We've only been able to base our opinions on the limited information QMP and PLM are obliged to file, plus what we know from boaters, John Lillie and a few other sources, but it looks to me as if PL never really intended that QMP would pay its NAA fees, and he and Steadman organised the cash flow with that in mind. All their actions and PL's announcements suggest they thought, and are still deluded enough to think, that CRT will roll over and let them repeat this scheme.

 

Wake up and smell the coffee, Mr Steadman, there must be some in the bistro if you've paid the catering suppliers.

 

Whilst full accounts are not available in the public domain, they will still have needed to be filed with HMRC in respect of all three companies in the group. These full accounts, together with the underlying financial records, will be available to the IP, a fact of which CRT will be well aware. In addition CRT, as a significant organisation, are likely to have a professional relationship with HMRC. This, together with the high court order they obtained, might provide an avenue not available to the average creditor of a liquidated company. It is not likely that the former owners and management of QMP are going to be invited in for a cosy chat with the head of the tax authorities to smooth over past difficulties as has been reported publicly in the press in recent times regarding certain companies.

 

It has been announced that the IP has returned title of the site to Mr Steadman, an essential prerequisite to PLT negotiating a new NAA. I do wonder if this action on the part of the IP is quite the "done deal" it appears.

[ReneArtois]

What I don't understand in all this is how the lower than forecast occupancy leading to lower income for PLM is blamed as the cause of QMP being unable to pay the NAA charges. With the large debt owed to PLM, it doesnt make sense that PLM hasnt been able to afford whatever rental/lease payments for the site were due, as they wouldnt be paying anyway. Either thats not the real reason or the agreement was too low in the first place. Perhaps instead PLMs rent was based on some odd arrangement of pay QMP whatever you can afford to use the site, which would explain why low income for PLM resulted in low income for QMP. The only sources of income QMP could have other than from PLM are the ground rent from the leaseholders and if the café/workshop etc were directly leased from QMP. As QMP needs to pay the NAA and service its mortgage (8% apparently, so £220,000 per year), if PLM hasnt been making significant payments to QMP for a time to be able cover its £250,000 debts per year, then QMP has long been trading as insolvent. If PLM has made payments to QMP which have all gone to service its debt, then that would be preferentially paying a creditor. All very worrying.

 

In terms of the debt to PLM, the build costs dont make sense (what does with these companies?). Surely the £550,000 would have come directly to QMP as the land owner? And as for the £800,000 investment into QMH by the shareholders, isnt it more likely that half went to each sub-company, giving the £400,000 debt that QMP had to QMH (and also giving PLM £400,000 be able to pay its landlord QMP before it started bring money in). So what could the £1.6m debt be from? What if PLM had an agreement to pay a nominal rent to QMP, but out of the kindness of its heart, PLM paid the mortgage interest itself; over the time scale since purchase (2007-2013 x £220,000), that would be in the right ballpark for the debt. Maybe PLM also recharged some staff/admin costs to QMP too. Thats my guess and without knowing the intercompany agreement, it could be from anything, and Im sure CRT will be pressing the IP to look at this carefully.

 

The final oddity is that although apparently over £1m was spent on developing the marina from an old quarry, somehow, despite this investment, the value of the site fell by nearly 30%. It will be interesting to see how much the site was sold to the new holding company for. If by the same funding arrangement as before, I cant imagine the investor would be happy at his £220,000 annual income from the site being reduced for the rest of time for the relatively small NAA debt. And without an NAA the site certainly would lose value.

Edited March 31, 2014 by ReneArtois

[kevinl]

What I don't understand in all this is how the lower than forecast occupancy leading to lower income for PLM is blamed as the cause of QMP being unable to pay the NAA charges. With the large debt owed to PLM, it doesnt make sense that PLM hasnt been able to afford whatever rental/lease payments for the site were due, as they wouldnt be paying anyway. Either thats not the real reason or the agreement was too low in the first place. Perhaps instead PLMs rent was based on some odd arrangement of pay QMP whatever you can afford to use the site, which would explain why low income for PLM resulted in low income for QMP. The only sources of income QMP could have other than from PLM are the ground rent from the leaseholders and if the café/workshop etc were directly leased from QMP. As QMP needs to pay the NAA and service its mortgage (8% apparently, so £220,000 per year), if PLM hasnt been making significant payments to QMP for a time to be able cover its £250,000 debts per year, then QMP has long been trading as insolvent. If PLM has made payments to QMP which have all gone to service its debt, then that would be preferentially paying a creditor. All very worrying.

 

In terms of the debt to PLM, the build costs dont make sense (what does with these companies?). Surely the £550,000 would have come directly to QMP as the land owner? And as for the £800,000 investment into QMH by the shareholders, isnt it more likely that half went to each sub-company, giving the £400,000 debt that QMP had to QMH (and also giving PLM £400,000 be able to pay its landlord QMP before it started bring money in). So what could the £1.6m debt be from? What if PLM had an agreement to pay a nominal rent to QMP, but out of the kindness of its heart, PLM paid the mortgage interest itself; over the time scale since purchase (2007-2013 x £220,000), that would be in the right ballpark for the debt. Maybe PLM also recharged some staff/admin costs to QMP too. Thats my guess and without knowing the intercompany agreement, it could be from anything, and Im sure CRT will be pressing the IP to look at this carefully.

 

The final oddity is that although apparently over £1m was spent on developing the marina from an old quarry, somehow, despite this investment, the value of the site fell by nearly 30%. It will be interesting to see how much the site was sold to the new holding company for. If by the same funding arrangement as before, I cant imagine the investor would be happy at his £220,000 annual income from the site being reduced for the rest of time for the relatively small NAA debt. And without an NAA the site certainly would lose value.

Yet another new member surprisingly well read on the 4,862 previous posts, must be a bored accountant

K

[johnlillie]

the interest agreed at the outset was 2% above Barclays base, which at the time was 6%, as it is now below 2%, Steadman changed the rules slightly, so that his interest payments never drop below 4%, which is what was being paid when I left in 2009. the leases were with QMP, and the issue of whether VAT was due on the lease payments was something I cannot remember actually being certified, however the ground rent and utility annual charges were I understand, liable to VAT.

[Alan de Enfield]

What we need is for a reprsentative of Clear & Lane to come and confirm what happened - how about this proposal :

 

The purchase & build cost of the marina was £4 million, Steadman loaned the £2.75 million leaving a shortfall that was made up of an £800k 'loan' from PLM and the 'long term lease' holder sales income.

Over the period PLM also paid the interest on the mortgage - amounting to another £800k 'loan'

 

I think John Lillie has already alluded to some of this.

[MtB]

What we need is for a reprsentative of Clear & Lane to come and confirm what happened - how about this proposal :

 

The purchase & build cost of the marina was £4 million, Steadman loaned the £2.75 million leaving a shortfall that was made up of an £800k 'loan' from PLM and the 'long term lease' holder sales income.

Over the period PLM also paid the interest on the mortgage - amounting to another £800k 'loan'

 

I think John Lillie has already alluded to some of this.

 

This can't be the scenario.

 

PLM as a new company had no funds. QMP raised the development funds partly through sale of the car park leases.

 

Somethign we haven't established is which company carried out and paid for the site development. I always took it to have been QMP but maybe PLM did a fair bit of it (e.g. building the restaurant) once the mooring income started flooding in, and invoiced QMP for it.

 

At which point a bright idea may have occurred. What might happen if QMP fails to pay these enormous bills...

 

This might explain the debt, and also how come QMP never had the funds to pay the NAA.

 

MtB

[costalot]

Boaty term..... QMP is a sacrificial anode. The IP very quickly worked out that QMP couldn't trade its way out of voluntary liquidation and with only a limited amount of funding from the directors has put it on the back burner to be eventual resolved at some future date when the dust has settled.

 

By cancelling the NAA CRT gave itself the option of installing a blockade. I assume if they had left a valid NAA with the pending liquidation QMP then they couldn't have blockaded the entrance. Or did the court order give CRT permission to blockade the entrance? I suspect it wasn't requested! However if the NAA had remained "valid with QMP under the control of the IP then surely it would have meant that QMP(mk2) couldn't apply for a new NAA as one already existed?

[Ally]

Boaty term..... QMP is a sacrificial anode. The IP very quickly worked out that QMP couldn't trade its way out of voluntary liquidation and with only a limited amount of funding from the directors has put it on the back burner to be eventual resolved at some future date when the dust has settled.

 

By cancelling the NAA CRT gave itself the option of installing a blockade. I assume if they had left a valid NAA with the pending liquidation QMP then they couldn't have blockaded the entrance. Or did the court order give CRT permission to blockade the entrance? I suspect it wasn't requested! However if the NAA had remained "valid with QMP under the control of the IP then surely it would have meant that QMP(mk2) couldn't apply for a new NAA as one already existed?

Iirc, the court ruled that QMP should shut off their own entrance and if they failed to do so, then C&RT could do so.

[MtB]

Iirc, the court ruled that QMP should shut off their own entrance and if they failed to do so, then C&RT could do so.

 

Yes that's exactly what happened. Lillie chose to stick two fingers up to the high court and leave the entrance open, in which case CRT have to do it themselves.

 

 

MtB

[Graham Davis]

 

Yes that's exactly what happened. Lillie chose to stick two fingers up to the high court and leave the entrance open, in which case CRT have to do it themselves.

 

 

MtB

 

So could have potentially left himself open for a "Contempt of Court" action.

 

He does like digging holes, doesn't he?

[johnlillie]

^{stop press! just heard that PL is "in court" today re access to PLM. Source has been known to get facts slightly askew in the past, so could just be a meeting of some kind with solicitors et el, but watch this space!}

stop press! Just heard that PL is "in court" today re access to PLM. Source has been known to get facts slightly askew in the past, could just be a meeting with solicitors et al, but watch this space!

[MtB]

I've been watching this space for 2½ hrs now, and nothing has moved....

 

 

MtB

[Alan de Enfield]

johnlillie, on 31 Mar 2014 - 4:26 PM, said:

 

stop press! Just heard that PL is "in court" today re access to PLM.

 

Possibly - he has an ASBO and is not allowed within x miles of PLM ?

Edited March 31, 2014 by Alan de Enfield

[Grace and Favour]

I've been watching this space for 2½ hrs now, and nothing has moved....

 

 

MtB

I thought most Boilermen had a good spacial awareness (?)

[Pen n Ink]

I'm losing puff - I don't think I can hold my breath much longer!