'Avocet' creditors owed £20 million- liquidators' report

by DOUG COLLIE,

Investors in the Avocet Group of 'disruptive technology' businesses who were promised annual profits of £300 million by 2021 have been told by liquidators of the former flagship parent company that unsecured creditors have lodged claims in excess of £20 million.

The first published report from Avocet Infinite PLC's joint liquidators Ashleigh Fletcher and Joanne Hammond, of insolvency specialists Begbies Traynor since their appointment in April 2020 makes grim reading for the 650 shareholders of the firm, re-named Omega Infinite in 2019.

The document states: "Our investigations have uncovered transactions which require further investigation. We are carrying out an extensive investigation into the reasons for the Company's failure and the financial performance of the Company."

Yet company sales and profits forecasts circulated by Avocet Infinite chairman Martin Frost in January 2018 predicted: "Avocet Agriculture sales £50 million, profit £10 million; Avocet Infinite Renewables sales £1,000 million, profit £200 million; Avocet Fuel Systems sales £3,000 million profit £150 million; and Avocet Bio Solutions [Irish-based subsidiary] sales £2,000 million, profit £250 million."

And Mr Frost declared: "It is an unfortunate fact that the Avocet philosophy has not been received with open arms by the UK or Scottish Governments even though Avocet, by 2022 is likely to generate a greater sales income than the total of the Scotch Whisky indusry".

For the record, in 2019 producers of Scotch clocked up combined sales of £4.096 billion.

The so-called progress report from Begbies Traynor shows the distinct lack of progress in Avocet's operations.

The massive debts of the liquidated company have been revealed just days after shareholders were told 90 per cent of the 'avocet' intellectual property had been 'lost' after directors failed to pay annual fees on the range of patents said to be held by subsidiary Avocet IP Ltd.

Says the report: "We have continued to review shareholder updates in relation to associated Companies provided by the director, regarding the sale of the intellectual property and subsequent payment of creditors. We are aware that reference has been made to the purchase of the Company's shares and other matters pertaining to the liquidation including the payment of the Company's creditors and costs with a view to applying to rescind the winding up order.

 "We can confirm that to date no creditor has formally withdrawn their claim in this matter and no funds have been received into the estate."

The liquidators indicate they are aware of a number of changes to the group structure prior in the period immediately leading up to their appointment.

"We are in the process of reviewing the changes to the group structure with regards to any potential impact it may have had on the Company's financial position. We are also investigating    any asset movement between associated companies and the intercompany debt position."

The report covers a range of other issues. It adds: "We are aware that the Company owned 100% of Avocet Natural Capital Pie, the Company demerged 100% of Avocet Natural Capital Pie to its shareholders, which included a 90% ownership of Avocet IP Limited. We are in the process of reviewing the demerger and the potential impact it has had on the Company and its shareholders.

"We understand that the Company sold its IP to an associated Company in December 2018. We have carried out an initial review the transfer of the IP with regards to the consideration received to ensure that the level of consideration received for the transfer of the IP was a fair value. 

"We are also aware that as part of the agreement, the associated Company was to also pay the Company £1m per franchise set up, for each master franchise and the Company is to receive 30% of the profits generated through seven franchise companies. We can confirm that no payments have been received to date. 

"Our investigations into the transfer of the IP are still ongoing and it would be prejudicial to the investigations for us to comment in any further detail at this stage. Notwithstanding any financial benefit (or otherwise), we have a statutory duty to undertake this work, therefore these costs cannot be avoided. Further, these investigations seek to protect the interests of creditors (and the wider public) by identifying and reporting offences which may not lead to recoveries for the estate, but may result in the directors being disqualified."

A Statement of Affairs in the liquidators' possession includes a figure of £1.050,000 for 'stock'.

The report notes: "(Avocet Cetane Additive) We are aware that the Company owns a quantity of Cetane Additive which the director advises has significant value, we have liaised with the director and Eddisons [an associate company of Begbies Traynor]  with regard to the marketing and disposal options available in respect of the same.

" A quantity of cetane additive has been recovered by Eddisons and is securely stored. We have been made aware that a quantity of Cetane Additive is held by JCB, attempts have been made to contact the relevant person at JCB however no response has been forthcoming to date."

Creditors are also told: "A meeting was held with the directors on 7 August 2020 at which we were advised by one of the directors that payment would be made by them personally to the Company's former accountants. This payment would enable the completion of the Company accounts by mid-September 2020, which would enable the VAT returns to be completed and the refund to be processed. We have been assured that this is progressing but to date the accounts have not been completed and the outstanding returns and supporting documentation have not been submitted to HMRC."

Turning to the outlook for creditors, the report states: "Unsecured creditors were estimated at £18,343,062.24 in the OR's (Official Receiver) handover notes. Claims in the sum of £20,918,919.93 have been received to date. For the avoidance of doubt we have not adjudicated on any of the claims at this stage. 

"Based upon realisations to date and estimated future realisations it is uncertain whether there will be sufficient funds available to enable a dividend to be paid to the unsecured creditors."

There are also significant costs associated with the work of the liquidators: "Our time costs for the period from 28/04/2020 to 27/04/2021 amount to £317,679.50 which represents 990.30 hours at an average rate of £320.79 per hour".