Bankruptcy hearing sets October 11th 'deadline'

EXCLUSIVE by COURT REPORTING STAFF

A judge hearing a bankruptcy petition against self-styled controversial businessman Martin Frost and his wife has given the couple until October 11th to produce evidence they can pay off a £4 million debt, said to be owed to a farm mortgage company, "within a reasonable time".

The two-day 'remote' hearing at Leeds Business and Property Court last week heard detailed submissions from legal counsel representing the Frosts and the petitioners, United Kingdom Agricultural Lending Ltd. (UKALL)

A 'last minute' cross claim from Mr and Mrs Frost seeking £13.3 million from the petitioners and from Emma Porter, administrator of one of Mr Frost's insolvent companies for damage and loss has not been accepted by Scotland's Court of Session, the hearing was told.

Judge Joanna Geddes had before her a thick bundle of documents linked to the case including four separate witness statements from Mr Frost. At the conclusion of proceedings the judge said she would hand down her judgment on October 18th.

Barrister Jonathan Rodger, for UKALL, told the hearing: "There are patterns of evasion in Mr Frost’s behaviour, and the late submission of this cross claim is part of that. Another spanner has been thrown into the works”.

Guy Olliff-Cooper, counsel for the respondents (the Frosts), made a number of submissions in an attempt to have the bankruptcy petition rejected.

On day one Mr Olliff-Cooper claimed  the creditor had not made enough of an effort to serve the statutory demand for payment on the Frosts. Several letters addressed to 25 Palace Street, Berwick [registered address for a number of Mr Frost's companies], were returned unopened by company secretary Eirlys Lloyd as the Frosts did not receive mail there and were not resident at that address. 

Then, said the lawyer, when the process server visited the couple's home in a Scarborough apartment block with demand documents these were posted through the communal letter box at the front of the building rather than via a side door leading to Mr Frost’s flat. They ended up 'in the bin'.

But in countering that argument, Mr Rodger said it was obvious why the server had gone to the service address of the debtor (25 Palace Street) and to the residential address at Belvedere, Scarborough. The purpose of these visits was to render personal service but that had not proved practicable as the Frosts were not there. 

He added: "After the door (in Berwick) was closed in the server's face the letter was posted through the letter box. The demand remained at Palace Street for some considerable time before Ms Lloyd posted it back to the server. This was a schoolboy attempt to evade service".

The second day of the hearing saw Mr Olliff-Cooper argue that there was no liability on the Frosts as the guarantees they signed when the original £3.25 million loan was made by UKALL were not enforceable. Until someone stated they would be bound by the terms of the guarantee the document was not a deed and was therefore not valid, according to the Frosts' counsel.

In response, Mr Rodger remarked “a desperate debtor raises facetious claims”. He told the judge: “You must consider the credibility of Mr and Mrs Frost’s defence...is it credible or a put up job?”

Although Mr Frost now denied there was any debt, Mr Rodger said that previously he seemed to accept responsibility for it in a series of emails dating from March 2020.

Quoting directly from the emails, Mr Rodger said Mr Frost had first written: “We shall reply with substantial proposals”. The following day he indicated “We are thinking of making an offer”, then a follow up email signed by Mr Frost and his wife suggested a payment of £2 million. And in an email written to his lawyer Mr Frost said: “My wife and I can manage £4 million.”

Said Mr Rodger: “That is a funny thing given that Mr Frost claims in this case there is no debt”. There had not been a ‘sniff of dispute’ in any of that earlier correspondence.

In a further submission Mr Olliffe-Cooper claimed this was a rare case in which the recovery of a debt was not the principal part of UKALL’s purpose. Bankruptcy would not be in the best interest of the creditors, he claimed. UKALL did not want to get back its money solely by pursuing the guarantors of the loan. If that had been the case UKALL would have pursued all of the guarantors of which there were six in total.

"There is another reason for pursuing my clients", said Mr Olliff-Cooper. "The real reason for this bankruptcy petition is to prevent Mr Frost from bringing the action (for £13.3 million) against UKALL".

Mr Rodger dismissed that submission as fantastical conjecture by Mr Frost.

Then in a forceful putdown of the cross claim, Mr Rodger declared: "“The fact that this document is produced on Wednesday of this week tells you all you need to know. The contents of this document are the ravings of a lunatic”.

Mr Rodger told Judge Geddes: "“The fact is the petitioner is pursuing the low-hanging fruit. Mr Frost’s evidence is that he is of good standing; he is a multi-millionaire. It is incorrect to say this is the only action the creditor has taken. Not only has it pursued the Frosts, it has put the principal borrower [Orrdone Farms] into administration, and Harcarse Hill farm [a property in Berwickshire] has been sold. And there is no evidence Mr Frost has had £13.3 million of property stolen or destroyed”.

After Judge Geddes suggested October 18th as the date for her judgment, Mr Olliff-Cooper indicated that Mr Frost's financial situation could change markedly before then; his client could get £20 million paid into his bank account,

But Mr Rodger said there was no evidence to show that Mr and Mrs Frost could pay the outstanding debt.

Judge Geddes ordered that the Frosts must provide their evidence of ability to pay by October 11th.