Mystery of 'Avocet's' £4 million patents deal

by OUR BUSINESS STAFF

The liquidator of a company which preceded the now insolvent Avocet Group of "ground-breaking" fuel and agricultural businesses has revealed that the full cash consideration in a £4 million intellectual property sale has still not been paid eight years after the deal was brokered.

It is understood a so-called Deed of Assignment was signed some time after AFS Ventures Ltd. allegedly sold its collection of patents to Avocet Infinite Ltd. in December 2014. Ventures was then placed into a solvent voluntary liquidation in early 2015, overseen by insolvency experts Eric Walls and Wayne Harrison.

Since then Mr Walls has produced a series of so-called Progress Reports recording the liquidation's tortuous process. But in March 2021 that process was converted to a Creditors Voluntary Liquidation after it appeared AFS Ventures was, in fact, insolvent.

The original Declaration of Solvency was signed by Martin Frost, the now bankrupt businessman who also served as a director of Ventures and of Avocet Infinite, the flagship of the Avocet Group. After changing its name to Omega Infinite, that company was the subject of a court order which placed it in compulsory liquidation.

In his latest report on the AFS Ventures liquidation - the document is publicly available on the Companies House website - Mr Walls records that the sole receipt during the 12 months from January 2022 was 53 pence in respect of bank interest (gross).

The report states: "The only remaining asset detailed in the Statement of Affairs [SoA] was in respect of the company's intellectual property (IP) which had been sold to Omega Infinite PLC which is in compulsory liquidation, albeit the final level of consideration in respect of that sale has not been paid".

Mr Walls explains that in a previous report he had said he was of the belief that the title of the IP had not transferred. He had referred to the non-payment by Omega of the full consideration due in respect of the transfer of the Ventures IP rights, and confirmed the situation was under review.

Mr Walls says: "I have been advised and acknowledge that there was no formal retention of title detailed in the Deed agreed at the time of the transfer of the IP.

"However, the company retains all of its legal rights for non-performance of the legal obligation. At this stage, it remains unclear as to whether any further funds will be realised in respect of the company's IP due to the complexities of this matter and the compulsory liquidation of Omega.

"Matters remain subject to ongoing review in respect of the sale of the company's IP and monies outstanding in respect of that sale".

Mr Walls goes on to confirm that he has complied with his obligations under the Company Directors Disqualification Act 1986. But the Department for Business Energy and Industrial Strategy has requested that the contents of his report submitted under the Act remain confidential.

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

The report mentions a sum of £175,000 for trade expense creditors. It is also stated that a claim has been lodged by His Majesty's Revenue & Customs (HMRC) in the sum of £100,650.

A business and financial expert who has taken a keen interest in the collapse of several 'Avocet' companies told us: "I note that AFS Ventures is a wholly-owned subsidiary of Loch Lomond Heritage [LLH], a Frost family company.  Until very recently, Mr Frost was a director of both of these companies, and Executive Director of Avocet Infinite.  In January of 2015 Ventures apparently sold assets, including the AFS air-to-fuel patents, to Infinite for £4 million.  

"So, it seems Mr Frost acted on behalf of all three companies in the transaction. Mr Frost has recently acknowledged that Avocet’s IP, which would include these purchased air-to-fuel patents, is worthless. 

"LLH is the same family company that Infinite, under Mr Frost’s leadership, also purchased a derelict jetty from, at a cost of £200,000.  The jetty was later disposed of at its real market value of £22,500. 

"If shareholders are wondering where their investment went, I believe that we are starting to get a very good idea."