Avocet "has not paid for patents" - liquidator

by OUR BUSINESS STAFF

Serious concerns have been expressed after the joint liquidator of AFS Ventures Ltd., forerunner of the troubled Avocet group of businesses involved in 'revolutionary' fuel development, revealed that intellectual property, once valued at £4 million, and vital to Avocet's success had still not been paid for.

According to insolvency expert Eric Walls, of KSA Group, who was first appointed as AFS Ventures liquidator in February 2015, title to the crucial patent has not passed to Omega Infinite PLC even though a deal had been agreed several years ago.

Omega Infinite (previously known as Avocet Infinite), currently in compulsory liquidation, is the former flagship of the Avocet group in which hundreds of investors invested many millions of pounds. The 'green' fuel promoted by Avocet management has still not been marketed eight years after the businesses were founded.

In recent months Avocet's former chairman, bankrupt businessman Martin Frost has told investors in a series of "newsletters" that the group's intellectual property had been sold in a multi-million pounds deal involving unnamed buyers, and payments to shareholders would be forthcoming.

However, a newly published progress report by Mr Walls on AFS Ventures' winding up states: "The only remaining asset detailed in the Statement of Affairs was the company's intellectual property which had been sold to Omega Infinite PLC, albeit the final level of consideration in respect of that sale has not been paid.

"Therefore, it is considered that the title to the intellectual property has not passed and remains with the company. The position remains under review".

Directors of AFS Ventures, including Mr Frost, signed a Declaration of Solvency in January 2015, a month before Mr Walls' appointment. The document estimated the firm's intellectual property was worth £4 million, and after debts were paid a surplus of £1,156,000 would be available.

A statement of affairs lodged by Mr Walls at Companies House in 2021 valued the IP at £493,000 but the amount of money any sale would realise remained 'uncertain'. In the meantime the original so-called members' voluntary liquidation (MVL) of 2015 had been converted to a creditors' voluntary liquidation (CVL) as AFS Ventures was, in fact, insolvent.

All 50,000 £1 shares in AFS Ventures are held by Loch Lomond Heritage Ltd., a company controlled by the Frost family.

Creditors of AFS Ventures include law firm Womble Bond Dickinson (£75,000) and KSA Group, Mr Walls' employers (£100,000 for liquidation costs).

The latest report says claims have been received from a creditor totalling £100,650. "Although this claim received from HMRC was marked as being a preferential claim, this matter is subject to ongoing review".

Mr Walls also updates creditors on investigations into the affairs of the company and the directors' conduct although the information is scant.

He writes: "I can confirm that I have complied with my obligations under the Company Directors Disqualification Act 1986. The Department for Business Energy and Industrial Strategy requests that the contents of my report submitted under the Act remains confidential.

"Our review of the affairs of the company remain ongoing and therefore I am unable to comment any further as certain matters may become subject to further action".

After studying Mr Walls' report an observer of Avocet's activities told us: "The liquidator’s statement makes sense, and is also supported by recent events."

The business expert commented: "Frost has been claiming since October 1st, 2021 - ten months now - that he had sold the Air-to-Fuel patent to the State of Israel. He stated at that time that all that remained was the formality of the distribution of the proceeds to the Avocet shareholders which he said was to take place with a payment of 50% in October 2021 and 50% in February 2022.

"None of the promised payments have been made, and despite the 10 months that have elapsed since this supposed sale, the US Patent and Trademark Office has no record of the Air-to-Fuel patent being transferred to any such entity.

"Like the very aptly named “mystery investors” -where these committed investors suddenly disappeared to is, well, a mystery! - and more recently, “the Funder”, this supposed sale seems to be simply a figment of Frost’s imagination."

A shareholder with a significant stake in Avocet remarked: "It is deeply concerning to be told Omega doesn't even own the patents which were supposed to be the keystones of the businesses we invested in. We were reliably informed in emails from the directors that some of the cash raised from the sale of intellectual property would be used to pay off creditors including AFS Ventures. Yet it wasn't their IP to sell".