Intellectual ownership patently in doubt

by LESTER CROSS

The dispute over the ownership of intellectual property linked to the Avocet 'wonder' fuel additive has deepened following the emergence of a document purporting to show that a deal to acquire the patents from "previous" owners AFS Ventures Ltd was completed in 2017.

This contrasts sharply with a recently published report from Eric Walls, the joint liquidator of AFS Ventures who claimed last month that the level of consideration in respect of the sale had not been paid.

Mr Walls wrote in his progress report on the liquidation of AFS Ventures - a procedure which has been in progress since 2015 - "Therefore, it is considered that the title to the intellectual property has not passed and remains with the company (AFS). The position remains under review".

After Mr Walls' report received coverage by Not Just Sheep & Rugby, Martin Frost, the now bankrupt former chairman of the Avocet group of companies, alleged in an email sent to 'colleagues' including investors in the troubled business that the Walls report was 'erroneous'.

He stated: "Via subtle pressure upon the AFS Ventures Plc liquidator’s legal advisors an erroneous Ventures company report was recently issued. Such report was seized upon by the media and Police Scotland (who urged on by the Orrite & Lord Advocate) thought they could tarnish ab initio the Avocet UN dossier."

The correspondence from Mr Frost, dated August 5th, also claimed the insolvency and legal professions were indulging in an abuse of power. He said: " The gist of their new ploy is that Avocet never had any intellectual property because the liquidator of AFS Ventures Plc owns it, and furthermore because the intellectual property belongs to Ventures, Omega must have been trading insolvently from an early date."

In an apparent effort to prove his point Mr Frost also circulated copies of a so-called deed signed in March 2017 between Avocet Infinite PLC (now called Omega Infinite and in compulsory liquidation) and AFS Ventures. Mr Frost was a director of both businesses.

The deed states that in December 2014 Ventures agreed to sell its shareholding in AFS Fuels Ltd and ICI Fuels Inc. (a Delaware company) for the sum of £683,000 to certain Ventures creditors.

According to the document, Avocet and Ventures entered into an agreement dated December 18th 2014 relating to the purchase of various intellectual property [IP] rights including those listed in the agreement by Avocet from Ventures.

Following that agreement a total of £303,000 was paid by or on behalf of Avocet to Ventures between December 2014 and December 2015. Meanwhile Ventures entered a solvent members' voluntary liquidation in January 2015.

"On February 23rd 2015 an assignment was entered into between Ventures and Avocet Solutions Inc. (as nominee of Avocet under the December 2014 agreement) regarding some of the IP rights (i.e. the UK patent applications) which James Robert Jennings [a colleague of Mr Frost] was authorised to sign by Eric Walls.

It had been agreed, says the document, in January 2015 between Mr Walls, the liquidator of Ventures and two of Avocet directors that two other companies would agree to accept equity in Avocet Infinite Ltd. instead of any surplus in the Ventures estate (if such arose).

"In the period 2014 to the date of the deed (March 2017) Avocet and or its connected entities and or persons on its behalf made payments in excess of $1 million towards the development of the IP rights."

The deed then reveals that in June 2015 a company called Beech Holdings, registered in Western Samoa, submitted a Proof of Debt for £720,000 in the Ventures liquidation based on a guarantee dated April 2014. "The Ventures liquidator rejected the Proof of Debt in June 2016".

Further proofs of debt were submitted in the Ventures liquidation by three former directors of Ventures.

Eventually, in December 2016 a settlement was entered into by Beech Holdings, Ventures (acting by its liquidator), Avocet and the three ex-executives of Ventures. Payments of £550,000 to Beech Holdings and £120,000 in total to the three former Ventures directors were funded entirely by Avocet, says the deed. Avocet also agreed to pay Ventures legal costs of £138,000.

And it goes on to state: "Eric Walls has confirmed that the figure estimated in the Ventures declaration of solvency of £1,850,000 for trade and expense creditors was over-stated. Similarly, the provision for costs and expenses of £1 million was overstated, and in fact likely to be in the region of £162,000".

A crucial passage of the deed reads: "It is now agreed by Ventures that Avocet has provided £2,780,000 of consideration to date and will provide within 12 months of the date of this deed a further £493,000 of consideration for the transfer of the IP rights under the December 2014 agreement." It is not known whether the outstanding £493,000 was paid to Ventures. 

The next section says that for the avoidance of doubt, from February 23rd 2015 in respect of the Ventures UK patent applications it assigned all of its rights, title, interest and benefit in the IP rights to the Avocet group of companies and that it has received full and final consideration for that assignment.

"Ventures also confirms that it owns no other IP rights whatsoever and that all that it has ever owned are now owned by the Avocet group of companies".

The deed circulated by Mr Frost was apparently signed by Mr Frost and by Janet Orr Frost on behalf of Avocet, and by Mr Walls and by Wayne Harrison as joint liquidators of AFS Ventures.

In a bid to establish the veracity of the 'deed' emails were sent to Mr Walls and to KSA Group, the company he works for, on August 7th. To date Not Just Sheep & Rugby has not received a response from either email address.

In a further email dated August 9th Avocet shareholders were told by 'Tim Carter' (the representative of the mysterious Parachute Holdings): 

"I have not received confirmation from the liquidator of AFS Ventures Plc that he has surrendered all interest in Avocet / Genfro intellectual property. This I expect to receive later this week along with Dr. Bob Jennings Genfro patent assignments."