Reports tell very different stories

 by EWAN LAMB

The remaining intellectual property of a company with links to the Avocet 'disruptive technology' Group is said to have a book value of only £493,000, a fraction of the £4 million estimate provided by the directors in a Declaration of Solvency signed in 2015.

And new figures show that instead of an estimated surplus of £1.156 million, AFS Ventures Ltd now has an estimated deficiency of over £200,000. In addition, the cost of liquidating AFS, anticipated to be nil when the business entered Members Voluntary Liquidation (MVL) six years ago now stands at £100,000.

Martin Frost, the businessman who is the only surviving director of AFS Ventures, and who chairs Avocet Natural Capital, has already claimed that a share convertible loan of £2.1 million from 'new investors' will enable Avocet Infinite (now called Omega Infinite and in compulsory liquidation) to pay off its creditors, "especially AFS Ventures".

However, AFS liquidator Eric Walls has produced a so-called Statement of Affairs for the company in a move which precedes a conversion of a solvent liquidation to a creditors' voluntary liquidation or insolvent liquidation. The statement is now available on the Companies House website.

As we reported last month, Mr Walls has already warned of serious consequences for directors and shareholders resulting from a switch from a MVL to an insolvent dissolution.

Several business advice websites include the following passage: "If it turns out the company is actually insolvent, the possible consequences are: The company will be placed into creditors voluntary liquidation. Any funds received will have to be repaid to the company under an indemnity. You may face disqualification as a director."

Mr Walls' latest annual statement of receipts and payments included the following reference to the consideration for the AFS Ventures business and its IP: "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 he added: "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 newly published Statement of Affairs allocates a book value of £493,000 for the remaining AFS patent[s] but the estimate as to how much the IP will realise is labelled "Uncertain". That leaves £20,614 of funds held by the liquidator as the only concrete asset.

Mr Walls provides details of unsecured non-preferential creditors who are owed £175,000 plus £1 due to Her Majesty's Revenue & Customs (HMRC). The deficiency also includes £50,000 in issued and called up share capital bringing the overall deficiency to £204,386.

The 50,000 shares in AFS are held by two companies, namely Loch Lomond Heritage Ltd. and Orr Developments Ltd., both controlled by Mr Frost.

The two principal creditors are law firm Womble Bond Dickinson (£75,000) and KSA Group Ltd., Mr Walls' employers (£100,000 for liquidation remuneration).

The Companies House file on AFS Ventures also includes a copy of the Declaration of Solvency signed by Mr Frost and witnessed by Bond Dickinson solicitor Victoria Smith in January 2015.

The declaration indicates that AFS directors "do solemnly and sincerely declare we have formed the opinion that the company will be able to pay its debts in full together with interest at the official rate within a period of twelve months from the commencement of the winding up".

Assets listed are: Intellectual Property £4,000,000; cash at bank £5,000; stock £1,000; and shares and investments £10. The liabilities noted are: Trade and expense creditors £1,850,000; provision for costs and expenses £1,000,000; estimated cost of liquidation £0.00. Estimated surplus after paying debts in full £1,156,010.