Shareholders and creditors who lost millions in the spectacular collapse of the New Earth Solutions group - the company handed a £80 million waste management contract by Scottish Borders Council - have been told of plans to revive the businesses so that new liquidators could challenge the actions of former office bearers.
More than four years after the council pulled the plug on its disastrous liaison with the Group (NESG), liquidators on the Isle of Man continue their long running investigation into New Earth's finance partners, New Earth Recycling & Renewables [Infrastructure] Fund, known as NERR.
Its many investors also suffered catastrophic losses while council taxpayers in the Borders picked up a £2.4 million bill after NERR failed to bankroll a planned £23 million waste treatment facility for SBC at Galashiels. After all of the firms named above became insolvent and were dissolved it was discovered that NERR had loaned the NESG businesses huge sums to keep them afloat. Many of the charges (mortgages) remain outstanding.
NERR was controlled, managed and promoted by the Premier (IOM) Group, and directors there earned extensive fees while NERR was active. But it took SBC several years to realise their much needed Easter Langlee waste plant would never be built because NERR did not have the cash and NESG's technology was not commercially viable.
NERR liquidators Alex Adam and David Craine, of insolvency experts Deloittes have issued their first update to creditors since February as the complicated investigation into the fund's affairs continues, funded by the Isle of Man Financial Services Authority [IOMFSA].
Investors, who were warned in 2016 there was little likelihood they would recoup any of their money, are reminded in by Mr Adam in his report that the Manx courts rejected an application to have NERR directors Michael Richardson and John Bourbon interviewed under oath.
Mr Adam writes: "The role of the Joint Liquidators is, in the circumstances of this case, to investigate the reasons for the failure of NERR, determine whether liability for the failure can be attributed to one or more parties and thereafter to consider whether there are viable claims that can be brought against those parties.
"Following the Court judgement, we wrote to the directors setting out detailed questions. Having received and reviewed the responses to the initial round of questions the liquidators are disappointed at the lack of insight provided.
"We are considering the appropriate next steps to progress this matter with our legal advisers. In the meantime, we continue to progress our investigations into the roles of other advisers to the Company and anticipate having made material progress in assessing whether there are potential claims which could be brought by the Liquidators.
Mr Adam goes on to describe the highly unusual process proposed by 'a third party' in a bid to get at the truth behind NESG's collapse into dissolution.
He states: "The Liquidators [ of NERR] have been approached by a third party which, we understand, has funding to investigate the prospect of restoring NESGL and NESFM (New Earth Solutions Facilities Management) to the company registry in the UK.
"Should this proceed, they would then look to appoint liquidators over those entities with a view to challenging the actions of former office holders of those companies with the objective of securing further recoveries for the creditors of those entities (including NERR). Whilst the Liquidators’ view is that the prospects of any recovery being generated for NERR from this action is highly speculative, we have advised the third party that we would support such applications as shareholder, provided there is no cost to the Company and at least the potential for a recovery."
Mr Adam advises that Deloitte will provide a further update on the progress of the
liquidation towards the end of December 2019. However should there be any
material matter to report on in the meantime, we will provide an update at that
time."
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