Sunday, 18 December 2016

Spectacular collapse: now an inspector calls!


The dramatic financial collapse of a group of businesses linked to a multi-million pound waste management contract rubber stamped by Scottish Borders councillors has been followed by the appointment of liquidators to the off-shore parent company which is to be wound up.

Financial commentators have expressed shock and surprise following confirmation that directors of fund promoters and managers Premier Group (Isle of Man) Ltd have decided to call it a day only weeks after several of their investment entities crashed, leaving thousands of investors out of pocket.

Documents lodged with the Manx Companies Registry, copies of which have been acquired by Not Just Sheep & Rugby, show how the decision was taken to wind up Premier Group at a 45-minute meeting of the three shareholders, Jamie Sutton, John Bourbon and Michael Richardson. Messrs Bourbon and Richardson participated by telephone as Mr Sutton chaired the meeting.

According to an extract of minutes of the meeting a so-called extraordinary resolution, passed unanimously by the shareholders states: "as the company cannot, by reason of its proposed surrendering of regulatory licence and the reduced sources of income, continue in business, the Company be wound up voluntarily".

The day before the meeting directors Sutton and Richardson submitted a Declaration of Solvency to the Isle of Man regulatory authorities in which they did "solemnly and sincerely declare that we have made a full enquiry into the affairs of the Company and have formed the opinion that the company will be able to pay its debts in full within a period not exceeding 12 months".

The failed investment funds, which yielded Premier's bosses many millions of pounds in management fees over a number of years included the New Earth Recycling & Renewables [Infrastructure] Fund (NERR) and the Eco-Resources Fund which invested in bamboo plantations in Central America. Both Premier subsidiaries crashed spectacularly this year with liquidators appointed.

Scottish Borders Council had expected NERR to put up the £21 million for a waste treatment centre at Easter Langlee, Galashiels in a venture which finally collapsed in 2015 after four years without any progress whatsoever.

The council's dealings with NERR and the associated New Earth Solutions Group which was also under Premier Group control cost local taxpayers at least £2.4 million. Now SBC is planning to spend a further £4 million on a waste transfer station on the site of the failed project to handle the region's rubbish before it is hauled by road to a centre outwith the area for treatment.

It is believed New Earth Solutions, now in administration, lost an estimated £4 million as a direct result of the Borders venture.

Liquidators Deloitte are currently investigating the NERR collapse, but have indicated there will be no return for investors.

Not Just Sheep & Rugby can now report that dealings linked to the Eco-Resources Fund are to be the subject of a separate investigation by order of the Isle of Man High Court following an application from the Isle of Man Financial Services Authority (IOMFSA).

Insolvency practitioner Paul Shimmin has been named as the inspector who will look into the affairs of the defendants (Eco-Resources Fund), and will submit reports to the Court. He has also been instructed to investigate the conduct of the fund's manager (Premier Group IOM Ltd), its administrator (Moore Fund Administration IOM) and its custodian Kleinwort Benson (Guernsey) Ltd.

The court order states: "The inspector shall deliver an interim report within one month of his appointment and thereafter further interim reports at monthly intervals to the Court with a copy to the claimant (IOMFSA)."

Mr Shimmin is also asked to report on any matter which comes to his attention during the course of the investigation which he considers ought to be presented to the Court. The claimant has liberty to add to or modify the scope of the investigation.

The last Eco-Resources Fund accounts to be published (covering 2014) show the managers collected fees of £90,906 from the loss-making entity. In their role as promoters Premier Group received £681,797 (up from £163,053 in 2013). The Fund also paid out a performance fee of £598,175 while sales and marketing costs of £1,843,371 (2013 £905,897) were levied.

The fee paid to Moore as administrators was £121,339 while custodian Kleinwort Benson picked up £30,091.

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