The entire board of management of a 'revolutionary' farm business have ignored repeated requests for information about the company's financial affairs from insolvency practitioners, called in nine months ago by agricultural lenders said to be owed £3.25 million.
And a progress report from the joint administrators of Borders-based Avocet Farms Ltd. (now called Orrdone Farms) reveals that a confidential statement concerning the conduct of directors has been lodged with the Secretary of State.
At the time of the company's collapse the directors were Martin Frost, James R Jennings and Janet Orr Frost. The company secretary was Eirlys Lloyd.
In their report administrators Jeanette Brown and Emma Porter state: "As a minimum we are required by the Statements of Insolvency Practice to undertake minimum levels of investigation work in order to fulfil our statutory obligations to report matters under the Company Directors Disqualification Act 1986. In particular, a confidential report must be submitted to the Secretary of State to include any matters which have come to our attention during the course of our work which may indicate that the conduct of any past or present Director would make them unfit to be concerned with the management of the Company. We confirm that our report has been submitted."
Creditors are also told in some detail about the difficulties Mrs Brown and Ms Porter have faced in their bid to determine the company's position when the administration commenced in January 2020.
The report explains in an executive summary: "Our work has been severely curtailed by the non-co-operation of all of the directors of the company in that they have singularly failed to provide any satisfactory explanations as to the state of the company’s affairs as at the date of our appointment. The Joint Administrators have made repeated requests to the directors to provide all necessary information, explanations and documentations, but to date all requests have been ignored."
According to The Insolvency Act 1986 the legislation can be used by insolvency practitioners to demand property from anyone having the insolvent company’s "assets and or documents such as its books, papers and records which would be relevant to the insolvent company’s financial affairs." The Act has mandatory characteristics and failure to co-operate by a company officer constitutes a criminal offence for which he or she may be prosecuted.
In the body of their report Mrs Brown and Ms Porter write: "The main aspect of non-cooperation by the directors which has hampered the progress of the Administration concerns the lack of provision of a Statement of Affairs as at 23 January 2020. The last audited accounts prepared were for the period ended 31 December 2017, which means that a full account of the company’s assets and liabilities have not been provided for a period of over 2 years.
"This has led to considerable uncertainty, and a disproportionate amount of time being spent by the Joint Administrators, in attempting to establish the underlying basis of the company’s true overall financial position, the overall affairs of the company and the conduct of the directors. What this means in practical terms, is that the Joint Administrators are not only uncertain about the position of the company in relation to certain assets, but also, we have been unable to establish a full picture of the company’s overall liabilities and in particular, the trade creditors of the company.
"The directors have failed to reply directly to specific requests for documentary evidence to substantiate various claims and allegations made by them. We have however been subjected to a large number of emails, from one of the directors, Martin Frost, sent either directly to us or indirectly to others and highlighted to us by third parties. These have led the Joint Administrators to believe that certain statements made by him are at best, inappropriate or in the extreme, incorrect."
A review of the limited accounting information provided showed that at the date of the appointment of Joint Administrators, Orrdone Farms Limited was owed money by various companies “connected” with them in the “Avocet” group.
And the report also shows: " We were informed by the Company Secretary on the day after our appointment that the company had ceased trading in early 2019 and that all employees of the company had either been made redundant in April 2019 or had been transferred across to the employment of other companies under the “Avocet” banner.
"It would appear however that those employees who had been made redundant were not paid their termination payments at the appropriate time, and therefore the Joint Administrators have had to spend time dealing with employee claims and liaising with the Redundancy Payments Service to ensure that the former employees received the statutory sums due to them."
In a section headed Disposal of Properties, Mrs Brown and Ms Porter say: "The disposal of the company’s two main farming properties, namely farms at Sunwick and Harcarse Hill, [both in Berwickshire] have been severely hampered by Scotland’s overall strict COVID-19 restrictions. The Joint Administrators’ efforts continue in that area, and the agents used continue to be those detailed in the Joint Administrators proposals issued in March 2020.
"Progress has been made in clearing out personal items held at the Harcarse Hill property and arrangements to make the property ready for marketing are at an advanced stage. Various claims have been made regarding the ownership of the contents of Harcarse Hill and time has been spent by the Joint Administrators in reviewing and investigating statements made concerning this matter, and requests have been made by us for documentation proving provenance and title.
"In the meantime, independent valuers have been engaged to catalogue, assess and value the contents held. Other than to separate out items which are clearly personal to make them ready for collection by the Directors, no other items have been removed (or sold) from the Harcarse Hill property."
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