by DOUGLAS SHEPHERD
Doubts over the ownership of the 'avocet' innovative fuels intellectual property have been expressed following publication of a report this weekend by the joint liquidator of AFS Ventures Ltd., a company with businessman Martin Frost as its sole director.
The report by Eric Walls, of KSA Group, appeared on the Companies House website soon after Mr Frost, chairman of Avocet Natural Capital [ANC], circulated details of a $100 million sale of that firm's 'jet fuel to air' intellectual property (IP) to unnamed American buyers. The deal is scheduled for completion next month, according to Mr Frost.
Mr Frost gave details of how the cash from the IP sale would be allocated with $8 million going to Avocet IP Ltd's creditors and $10 million being used to pay UK Corporation Tax. In addition some $5 million is to go to pay off Omega Infinite plc (in liquidation)'s creditors. After deductions, Mr Frost calculated there will be $56.6 million available for ANC shareholders.
In November 2020 Mr Frost told ANC's 600 shareholders in a letter that a share convertible loan of £2.1 million from 'new investors' would: "Put Begbies [Omega's liquidators] into funds so that the Omega Infinite Plc restoration process to the Company House Register can begin" and "pay off certain Omega creditors especially AFS Ventures Plc".
Innovative fuels specialists AFS Ventures was the subject of a so-called solvent liquidation in 2015 when a Declaration of Solvency, signed by the company's directors, including Mr Frost, estimated the IP's value at over £4 million, sufficient to pay off creditors and costs with more than £1 million to spare.
However, in his 2020 statement of receipts and payments, Mr Walls warned that with regard to the sale of the IP: "the liquidators now have a considerable concern as to whether this full level of consideration will be paid.
"It may prove necessary to convert this liquidation from a solvent liquidation to an insolvent liquidation. If this does prove necessary, then this could have serious consequences for the company's directors and for its shareholders".
The new report from Mr Walls confirms that the conversion to a creditors' voluntary liquidation will now take place. Substantial costs remain outstanding.
In a reference to the consideration for the business and its IP, Mr Walls writes: "Due to the commercial sensitivity of both the negotiations and the final agreement eventually reached between the parties concerned these matters will not be discussed further in this report."
But later he observes: "Shareholders should note that monies remain outstanding in respect of this sale [the IP] and as such full title to the IP referred to in the sale agreement has not fully passed to the prospective purchaser. This matter may well become subject to legal action".
The report also reveals that specialist law firm Womble Bond Dickinson, called in to advise the liquidators of AFS Ventures, are owed £110,000 while Mr Walls and his colleague conduction the liquidation are due £30,000. There is concern, says Mr Walls, that neither of those amounts may be paid. In a summary of receipts and payments the IP settlement is recorded as £681,383.60.
The appearance of Mr Walls' report resulted in a post on the Avocet Shareholders Forum by 'FDF' which claimed in what appeared to be a direct challenge to Mr Frost: "You never got around to actually completing the purchase of this IP from AFS Ventures Plc. In what must be incredibly bad timing for you, the AFS Ventures liquidator has just released his January 2021 Report on Companies House. Sorry, but I am afraid no buyer is going to spend US $100M on IP whose ownership is very much in doubt."
Those claims were dismissed as 'sour grapes fiction' by Mr Frost in another newsletter to shareholders.
He wrote: "In truth, the liquidator’s statement was composed by solicitors Womble Bond Dickinson from notes left by Avocet shareholder, retired solicitor John Pennie who had submitted an excessive and disputed fee note.
"Such note was superseded by an agreement between Mr Eric Walls (liquidator of AFS Ventures Plc) and (lawyer) Mr. Kit Jarvis acting for Omega Infinite Plc. when full IP title was granted to Omega Infinite Plc. The issue of Omega’s debt outstanding to AFS Ventures Plc was fully explored by our US IP purchaser and consequently full payment for any outstanding due from Omega Infinite Plc is prior noted: ‘To Omega Infinite (mainly for Omega creditor payments) - $5,000,000’.
"As with FDF’s other half-truths, FDF is being mischievous and prompting doubt where there is none."
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