Luxury is back! Barrie Knitwear profits up 140%

by DOUGLAS SHEPHERD

Hawick's high end cashmere knitwear business which produces luxurious garments for the Chanel fashion brand, saw its operating profit soar spectacularly in 2022 as the global economy recovered strongly following the damaging Covid-19 pandemic.

Barrie Knitwear, which employs more than 260 people in the Scottish Borders and Arbroath - the annual wage bill exceeds £6 million - enjoyed a 15% increase in turnover last year, up from £16.29 million to £18.83 million.

The much improved performance resulted in an operational profit of £1.453 million, 140% better than the respectable £604,000 figure for 2021.

These results come ten years after the Barrie brand, trade and assets were acquired from the ailing Dawson International Group to become 100% owned by Chanel. There had been a danger in 2012 that the Barrie operation and 170 local jobs could be lost with other Group businesses being liquidated.

The iconic fashion house saved the day by purchasing Barrie - founded in 1903 - in a £4.8 million deal with the Dawson administrators. 

In the 2022 annual report and accounts, managing director Jan Young explains the 15.6% upsurge in turnover was due to a recovery in the market after the initial impact of Covid-19. The increased operating profit was down to higher sales and improved efficiency.

According to the report: "The company manages the skills shortage risk by continually seeking to recruit and retain skilled people and by operating its own training school for key skill manufacturing operations. A network of reputable UK and EU sub-contractors is also being developed".

The majority of Barrie's output (£13.675 million of total turnover) ends up in France while UK sales were worth £1.150 million and in the case of the USA £438,000.

The report also states: "Following Russia's invasion of Ukraine, management took the decision to pause all operations with Russian customers. Whilst the geopolitical situation remains complex, the company's exposure in the Russian market is minimal".

Barrie says it is working with a company in Mongolia to establish an improved supply chain for cashmere fibre.

The Barrie Knitwear range currently includes an embellished sweater retailed by Harrods with a price tag of £1,540 while the Lyst website is advertising a women's green cashmere cardigan jacket for £1,700.67 (reduced from £1,994.78).

Meanwhile Chanel reported record sales in 2022, "reflecting the strength and uniqueness of the Chanel brand". There was strong growth across the three categories of Fashion, Fragrance & Beauty, and Watches & Fine Jewellery.

Total revenue of $17.2 billion last year compared to $15.6 billion in 2021. The Group's operating profit rose from $5.461 billion to $5.776 billion while Chanel's global workforce increased from 28,500 to 32,000.

Frosts to appeal 'eviction' as life president Jennings intervenes

by OUR BUSINESS STAFF

A conference call during 2021 in which copious notes were taken by liquidators investigating the financial affairs of the insolvent Avocet parent company Omega Infinite PLC in fact never took place, according to the company's bankrupt chairman Martin Frost and fellow director Dr 'Bob' Jennings.

The latest development in the 'disruptive technology' Avocet wonder fuel saga will involve an appeal by Mr Frost and his wife Janet against their 'eviction' from their home in Scarborough, shareholders were told in lengthy correspondence circulated by Mr Frost today in his role as joint life president of Genfro Ltd. He shares that post with Dr Jennings.

Insolvency practitioners Ashleigh Fletcher and Joanne Hammond petitioned the courts in Leeds for the repossession of two upmarket apartments in Scarborough, said to have been paid for by Mr Frost using more than £400,000 of investors' cash. A judgment handed down at the beginning of July will now be challenged at appeal by the Frosts.

A bundle of court papers supporting the repossession action includes a sworn statement from Ms Hammond and a file note of the conference call which was held on January 18th 2021.

Ms Hammond's evidence is: "In a conference call with Mr Frost, my joint liquidator Mr Fletcher, Oliver Adams of my office and Bob Jennings (another director of the Company) on 18/01/2021, Mr Frost was asked to explain the payments (referenced). At first he said they were book entries and then when he was told they were not and that they were cash payments, he said they were for book stock which was then sold back to Loch Lomond Heritage Limited. I have seen no evidence whatsoever to support that explanation and I do not believe it was true."

 The conference call file note shows the four attendees were Mr Fletcher (AF) and Oliver Adams (OA) from the liquidators' office, Mr Frost (MF) and Dr Jennings.

A long list of 'main points' from the discussion includes this entry: "Martin agreed to give the joint liquidators a debenture over Avocet Agritech Limited [a subsidiary of Omega], Grenfos Limited would then look at buying the debentures that Omega has over Faculties and Agritech".

There is also a detailed account of a discussion during the conference call concerning transactions between Scottish Academic Press [SAP] Ltd and Loch Lomond Heritage Ltd, companies both controlled by Mr Frost at the time.

An extract from the file note records this conversation between those present:

"AF – From Omegas point of view, two large payments made to SAP.

MF - I don’t think there are any payments, book entries rather than payments.

OA clarified .. in 27 September 2017 there was a payment to SAP of £150k followed on 28 September 2017 with another payment of £145k.

MF I think that's book stock rather than the brand, fairly convinced that stock was sold back to Loch Lomond Heritage.

AF How many books are we talking?

MF At least 12k maybe as many as 20k books

AF why did Omega Acquire those?

MF - The idea was that Faculties was to be run as a separate development business just looking after property & other aspects and also gaining a degree of income from sale of books. Faculties also had own set of board members control of cheque books etc. Faculties didn’t have the money so Omega bought the stock, part of the intercompany debt between Omega and Faculties is down to that, Loch Lomond picked up the brand.

OA - Just to be clear Funds transferred from Omega to purchase stock from SAP which was your sole trader business.

MF – Yes, ------- wrote to royal bank then had separate accounts done."

But now, Mr Frost claims that meeting never happened at all.

And today's 'update' to Genfro shareholders also includes a copy of a witness statement submitted to the court by Dr Jennings backing that assertion. It will form part of the Frosts' appeal.

In it the witness writes: "I, Dr 'Bob' Jennings, state on July 23rd 2023 that I have no recollection nor does my diary nor my phone records indicate that I on 18th January, 2021 or at some other date, joined Martin Frost in a conference call with Ashleigh Fletcher and Oliver Adams of Begbies (Begbies Traynor, insolvency practitioners) in which Martin Frost admitted that he in the guise of SAP he feloniously took money in late 2017 and in 2018 from Omega to wrongly pay for flat 2 Belvedere and Flat 4 Belvedere, Scarborough.

"In my opinion the statement uttered by Ms J Hammond (and transcribed as fact for 18th January 2021 as being true) is false and malicious".

Meanwhile, Mr Frost has also explained the circumstances surrounding his "threatened arrest" after a warrant was issued following his failure to appear at Jedburgh Sheriff Court last week.

In his shareholders' missive, he quotes from recent correspondence with the authorities in Scotland,: "In May 2023 North Yorkshire Police, upon the allegations received (alleged malicious emails) closed down all my phone numbers and email addresses".

Therefore, the only way the Jedburgh court could contact him would be via a Pennsylvania email address. He added: "I do not have any details of my case before the Jedburgh Court".

'Discrimination' claimant ordered to pay Borders hoteliers £2,800

by LESTER CROSS

A former assistant manager at a leading small hotel in the Borders has been ordered to pay her former employers more than £2,800 after her claims of racial and sexual discrimination were thrown out by an Employment Tribunal ruling earlier this year.

After Portuguese national Tina Nogueira's allegations against the owners of Carfraemill Hotel, near Lauder, were dismissed in March, the family-owned business sought an award of what were described as “expenses and punitive costs” but which the Tribunal interpreted as an application for a preparation time order and out of pocket expenses.

A  tribunal hearing had been told that at the time the claimant was employed at the 10-bedroom Borders hostelry, part of the Inntuitive Group run by the Reeley family, the business had over 100 employees and now have around 300. At any given time around 40% of the employees are foreign nationals. 

Ms Nogueira, who was living in Scotland in 2021, placed an advertisement looking for work. She had taken her previous employer in Portugal to court for non-payment of wages.  

Following an interview she was subsequently offered employment as assistant manager at Carfraemill on a salary of £25,000 per annum.

After leaving her job Ms Nogueira submitted a claim to the Tribunal in which she alleged race discrimination and that she was due sums following the termination of her employment in respect of holiday pay and unpaid wages. 

She had previously made claims of sex discrimination and unfair dismissal which were withdrawn. A hearing took place over a total of eight days in November and December 2022 and March 2023. In a judgment signed on 31 March all of the claims were dismissed.

A second judgment, published today, deals with the respondent's request for financial recompense from the claimant.

The judgment from employment judge Ian McFatridge states: "In this case it was the respondent’s position that the claim was wholly vexatious. It was the respondent’s position expressed several times during the hearing that the claimant did not have any genuine belief that her treatment had been on the basis of race but that she had simply ticked the box once she discovered that she did not have sufficient qualifying service to bring a claim of ordinary unfair dismissal."

The claimant’s representative had made the point that she believed strongly in the justice of her claim.

However, the judgment continues: "With regard to the way the proceedings had been conducted the respondent’s position was that the claim had been incoherent and that throughout the claimant had been urged to provide some evidence showing, even in the slightest degree, a connection between the poor treatment she alleged and her nationality and the claimant had singularly failed to come up with this.

"The Tribunal’s view of the matter was that the claimant’s behaviour throughout the hearing certainly met the standard of being unreasonable."

In a highly critical section of his ruling, Judge McFatridge writes: "Whilst the Tribunal accepted that the claimant may have honestly believed that she had been treated badly the objective facts of the matter suggested that this was simply not the case. Much of what the claimant complained of; having to come in to work to cover staff absences, not having control of the rotas of other staff were simply features of the job of assistant manager. 

"On a number of matters the Tribunal found that the claimant’s evidence was entirely disingenuous and that she was quite happy to try to bend the truth where she felt this would assist her case. An example of this was in relation to her eventually admitting that she had herself approved her holidays in January for dates which management would never have allowed.

"With regard to the meat and bones of her race discrimination claim the Tribunal found absolutely no scintilla of evidence that any of the claimant’s treatment was in any way discriminatory."

The judgment concludes that the respondent had been put to considerable trouble and expense as a result of the claim being made and the way the claim was conducted. 

"We are in no doubt that it would also have been a cause of worry and concern to them. They are employers of a large number of employees of foreign origin and it would be a concern to them to be accused of race discrimination despite there being no evidence to support such a claim."

 The sums sought by the respondent included a charge for preparing for the hearing of 110 hours. The Tribunal considered this was a reasonable figure for the time to be taken to prepare for such a hearing. If anything, it was on the conservative side. The business had charged this at £25 per hour but the statutory figure for 2022 was in fact £42 per hour.

"Taking into account the correct figure then the total preparation time for the 110 hours spent preparing for the Tribunal would come to £4620. Given that the respondent restricted their application to a total of £5640 we felt it appropriate to base our 50% on that. The claimant shall therefore pay £2820 to the respondent."

'Luxury holidays' paid for by Avocet company bank account

by OUR OWN REPORTER

Luxury holidays featuring business class travel to Venice, Athens and Lisbon coupled with high quality accommodation were enjoyed at the company's expense by Avocet Group chairman Martin Frost and his wife, according to paperwork produced by liquidators of the 'disruptive ' technology outfit.

Insolvency experts challenged payments from Mr Frost's Director's Loan Account [DLA] totalling over £28,000 to Classic Collection Holidays during his tenure at the helm of the troubled parent company Omega Infinite PLC. The tour company specialises in "Personalised Luxury Holidays", says its website.

And the insolvency practitioners also queried other 'travel expenses' met from the DLA which topped £100,000, and for which there were "no receipt or other vouching whatsoever".

The findings from the assessment of Omega's affairs, including disputed DLA payments - the account was overdrawn by more than £850,000 when it was closed in 2019 - formed one strand of evidence in support of a court application aimed at repossessing two upmarket Scarborough flats, bought by Mr Frost using shareholders' money, according to a judge.

Mr Frost, a bankrupt, has claimed the deficit details of the DLA had been "fabricated" and did not reflect his indebtedness to the company.

A document sent to Mr Frost by a law firm representing liquidators Begbies Traynor stated: "Our clients have identified numerous payments made by the Company in respect of foreign travel. Some of these payments are supported by invoices within the Company's books and records but others are not.

"A total of £28,589 was paid to 'Classic Collection Holidays' for seven trips to various European
destinations including Venice, Athens and Lisbon. The invoices for these trips are contained within the Company's books and records. It is not apparent what, if any, business interests the Company had in those locations. 

"Our clients note that each of the invoices records that you and Mrs Orr Frost travelled business class, stayed in a high standard of accommodation and stayed for up to seven nights (well beyond what one would expect to be necessary for a business meeting)."

Mr Frost had been asked to explain and provide evidence that the trips with Classic Collection Holidays were for the benefit of the Company and its business but had not done so. The liquidators considered it reasonable to conclude that the trips were luxury holidays for Mr Frost and Mrs Orr Frost and were not for the benefit of the Company.

The court paper continues: "Our clients have identified from the Company's bank statements and Xero ledger in relation to travel expenses payments totalling £100,636 for which there is no receipt or other vouching whatsoever. The majority of such payments were made to Thomas Cook Travel. 

"Our clients have been unable to identify any evidence that the Company derived any benefit from this expenditure or that it was incurred for that purpose."

By causing or allowing the Company to incur expenditure on travel for the personal benefit of the Frosts, or otherwise than for the benefit of Omega and its business, Mr Frost had breached his duties as a director. 

Another matter covered in the correspondence from the law firm relates to payments made from the DLA to a company called Loch Lomond Heritage, referred to as LLH.

LLH was incorporated in 2012, and Mr Frost had been its sole director from the outset.

.

"We wrote to LLH on behalf of our clients concerning payments in the sum of £222,872 made from 28 November 2017 to 9 July 2019 which we and our clients consider were preferences. We have not received a satisfactory response to our letter.

"We and our clients consider that, as well as being preferences, the payments to LLH were made in breach of your duties as a director of the Company".

Avocet: the Catholic Church and a Milan cheese factory

EXCLUSIVE by OUR BUSINESS STAFF

Avocet Group chairman Martin Frost told investigators he had to purchase a Tipperary priest's house in his own name while using company cash because of Roman Catholic Church restrictions on selling property to corporates and non-Irish.

The explanation was given to liquidators looking into the affairs of Omega Infinite PLC, the Avocet parent company, which became insolvent and folded in 2019, leaving a trail of debt and 650 anxious shareholders. 

The 'revolutionary' fuel-making technology promoted by Omega failed to deliver any marketable product. But Mr Frost has previously denied allegations that he and his fellow directors had presided over a Ponzi scheme.

Four transfers totalling 155,000 Euros made by Mr Frost from Omega's bank account to a law firm in Ireland as payment for the house in the village of Three Mile Borris, near Thurles, were among the matters queried by insolvency practitioners. They maintain many of the withdrawals made from the Director's Loan Account (DLA) used by Mr Frost did not benefit the company but were for his personal gain.

The involvement of the Catholic Church in the Avocet saga, and £54,000 given by Mr Frost to an Italian farmer are among the topics covered in a liquidators' Letter of Claim sent to Avocet's chief in September 2021 with a demand for clarification and for payment of over £2 million within 28 days.

According to the letter: "The Company made the following payments to the client account of O'Donovan Baker (a firm of solicitors in Cork, Republic of Ireland): 16 March 2018 €15,000; 4 July 2018 €20,000; 11 October 2018 €20,000; 19 October 2018 €100,000; Total €155,000.

"John O'Donovan of O'Donovan Baker has stated to our client that these payments were received as part of the purchase monies for a property at Two Mile Borris, County Tipperary and that they acted on your behalf in the purchase of the said property. None of the payments to O'Donovan Baker were posted to the ledger of your DLA which they should have been if, as you say, they were personal advances to you."

Earlier, in an email to the liquidators, Mr Frost gave this explanation for the Tipperary deal:

"The objective of this cottage was to provide accommodation for Avocet folk working and visiting the Avocet Lisheen operation instead of running up huge accommodation bills. In Two Mile Boris property was difficult to obtain so an arrangement was made to acquire the old priest's house which the church had let to the council for social housing.

"As you are no doubt aware there are (informal) restrictions on who the Irish RC Church will sell to - not to corporates and non-Irish. I have a distinguished Irish pedigree and I was (an) acceptable purchaser to both the Church & State".

He said he had taken the house to be passed on to Avocet Bio Solutions, an Irish-registered subsidiary business of Omega Infinite, previously called Avocet Infinite.

However, the apparently sceptical liquidation team told Mr Frost: "Our clients do not understand the Company to have had any operations in Lisheen and any such operations were conducted by Avocet Bio Solutions plc. As such, they believe that your references to Avocet in your email  were not to the Company and there was therefore no sense in which the purchase of the property was intended to benefit the Company or its business. The Company has a proprietary claim to the assets acquired by you using money misappropriated from the Company. You hold such assets as constructive trustee for the Company."

And the Letter of Claim continued: "Further, your fiduciary duties require you to account to the Company for the use of the €155,000 referred to. The Company is entitled to trace that money into the property purchased in the Republic of Ireland and to require you to account as a constructive trustee.

"If you have transferred the property to Avocet Ireland, then Avocet Ireland is also bound by the constructive trust. The reason is that it is to be inferred from your email that Avocet Ireland was not a bona fide purchaser of the property for value without notice".

The liquidators then turn their attention to the £54,357 paid by Mr Frost from the company's account to one Guillo Onesti.

Mr Frost had told them: ""It is complicated but Avocet Bio Solutions was also to have a large shareholder input from the Roman Catholic Church – in large measure this was to derive from the Italian Onesti family who were giving part of their farms around Milan to the church, the balance including the cheese factory Avocet Bio Solutions was buying for some 20 million euros.

"In 2018 various Avocet & Frost payments were made to the Onesti family and an Italian memorable chapel was given to the Roman Catholic Church. In Two Mile Boris I donated in 2017 to the RC Church part of a playground for their school."

In the view of the liquidators, Omega did not appear to have derived any benefit from this payment to Onesti. Mr Frost's explanation did not suggest there was any prospect of it deriving such a benefit given that it appeared the payments and donations to the Onesti family were intended to benefit Avocet Ireland.

"We consider that by causing or allowing the payment to be made to Mr Onesti, you breached your duties to exercise your powers as a director for the purposes for which they were conferred; to promote the success of the Company in good faith - the payment was intended to promote the success of Avocet Ireland; to act in the best interests of the Company's creditors as a whole; to exercise independent judgment; and skill and care".

Multiple items of "personal expenditure" in director's loan account

EXCLUSIVE by OUR BUSINESS STAFF

Liquidators investigating the affairs of the insolvent Omega Infinite PLC uncovered details of what appear to have been numerous personal purchases made on a Director's Loan Account [DLA] by the company's chairman, 'visionary' businessman Martin Frost.

Among items included in the account were credit entries for luxury food retailers Fortnum & Mason, upmarket Edinburgh restaurant Bar Frizzante, and the highly acclaimed Bells Fish & Chips. The liquidators also asked Mr Frost to justify a series of payments made from the account, and totalling £121,000, to a company called Scottish Academic Press (SAP), of which he was a director/sole trader.

The full list of  alleged 'non-company' purchases and transactions via the DLA were put to Mr Frost in a liquidators' Letter of Claim in September 2021. The document formed part of the application made to the court by the liquidators who are seeking to recover two luxury apartments in Scarborough, bought by Mr Frost using £425,000 of Omega's funds.

The letter showed that as of 9th November 2019, Mr Frost's DLA was overdrawn in the sum of £850,747.

And the liquidators from insolvency practitioners Begbies Traynor required: "On behalf of the Company, our clients demand immediate payment of the said sum o £850,747 albeit it is considered that this figure understates the extent of your indebtedness to the Company."

In his written evidence to a recent court hearing, Mr Frost claimed the DLA had been 'fabricated'.

Despite an assertion by the liquidators that Omega was insolvent by January 2017, Mr Frost, in a witness statement, signed by him in April of this year, declared: "In January 2019, Martin Frost was chairman and CEO of an intellectual property group (Omega Infinite PLC) independently valued in excess of £200 million".

He dismissed the liquidators' application statement to a judge in the Leeds courts as "a diatribe of half truths".

Mr Frost concluded his statement with: "Finally, not only should the Orrites and 'insolvency folk' be ex-communicated from society, but also should their lapdogs to wit; the dishonest Jeffrey clan; the crystallised journalist Bill Chisholm", and one other named individual.

The Letter of Claim specifically mentions the payments to Fortnum & Mason, Bar Frizzante and Bells Fish & Chips before going on to state: "or items which did not otherwise benefit the Company (e.g. car tax for your personal vehicles, gas and electricity for the Chandlery [a building in Berwick-on-Tweed] which is not a property owned by the Company). It is incumbent on you as a director of the Company to justify any of your entitlement to credits to the DLA and you will be required to do so."

The document outlines payments in the sum of £121,510 made between 13 June 2019 and 20 November 2019  to Scottish Academic Press which "we consider are payments made to you personally and which were not for the benefit of the Company or its business".

As the Letter of Claim explains: "The DLA ledger includes a number of substantial payments to SAP. Those payments are habitually referenced 'Scottish Academic Press – trfr to SAP – essentially M Frost'.

It is also revealed that in a conference call with the liquidators' representatives which also involved Omega director Dr  Bob Jennings held on 18 January 2021, Mr Frost was asked to provide background in relation to SAP and to explain why the Company had made payments to it.

"You explained that SAP is a publishing house that had been trading for some 200 years. You were introduced to the opportunity to purchase the SAP business by a friend at Edinburgh University. The business had been operated through a limited company but was later transferred to you to operate as a sole trader."

Mr Frost had stated in Infinite's 2017 accounts which were approved by the board and signed by him that the business and brand of SAP was sold to Avocet Faculties Limited, a subsidiary of Omega in 2018 for £300,000.

But the liquidators state in their letter to Mr Frost: "However notwithstanding the claimed transfer of the business and brand of SAP, our clients believe that payments by the Company to SAP recorded in the DLA ledger were payments which were made to you personally.

"Our clients consider that each of the payments to SAP recorded in the ledger of your DLA have been correctly debited from your DLA as they are payments to you personally and for your personal benefit. Those payments total £949,160. As indicated, our clients believe that a further £121,510 was paid to your account in the name of SAP but such payments were not posted to the ledger of your DLA.

"Our clients believe that you utilised monies paid to your account in the name of SAP to purchase land and buildings."

Avocet chairman was hit with £2 million demand from liquidators

 EXCLUSIVE by OUR BUSINESS STAFF

Martin Frost, the one-time head of the Avocet Group of businesses, faced claims from his parent company's liquidators for the repayment of more than £2 million following an investigation of the firm's affairs, according to court documents seen by Not Just Sheep & Rugby.

Items listed in a so-called Letter of Claim, sent to Mr Frost on behalf of insolvency practitioners Joanne Hammond and Ashleigh Fletcher, liquidators of Omega Infinite PLC, in September 2021 included an overdrawn Director's Loan Account [DLA] with a deficiency of £1.176 million.

The 12-page letter also details a number of other financial transactions said to have involved Mr Frost - now bankrupt - which were of no material benefit to shareholders in the company. Omega was supposed to be developing a revolutionary green fuel before it folded, and had attracted millions of pounds of investment by some 650 shareholders.

The document formed part of the evidence placed before Judge Christopher Royle in the Leeds courts in a bid by the liquidators to repossess two luxury flats in Scarborough, said to have been purchased by Mr Frost for £425,000 using company funds.

But in a witness statement, Mr Frost claimed the £2 million demand - to be paid within 28 days - had been "based on a fabricated Omega Frost loan account".

Omega was wound up by a court order following a petition presented by law firm Fieldfisher - a creditor with unpaid solicitors' bills - in November 2019. The joint liquidators were appointed with effect from April 2020, and they embarked on a year long inquiry into Omega's activities before the Letter of Claim was sent to Mr Frost.

It states: "Our clients have investigated the Company's affairs in accordance with their statutory and professional duties. In light of those investigations, it appears there are claims which should be pursued against you and your fellow directors."

After setting out the duties and responsibilities of company directors, the letter declares: "At such times as you knew or should have known that the Company was insolvent, or likely to become insolvent, your duties extended to acting in the best interests of the Company's creditors as a whole. We consider that you knew or should have known the Company was insolvent from 10 January 2017, if not before".

The reasons why Mr Frost should have realised Omega was 'bust' are then set out in some detail. These include:

"On 10 January 2017, the Company entered into an agreement with Mr Glyn D. Short (an inventor and developer) that the Company would pay Mr Short a consultancy fee of $5,000 per month commencing that month. The Company made two such payments in January and February 2017 but did not make any payments to Mr Short from March 2017 onwards. The amount outstanding to Mr Short upon the Company's winding up was $110,000.

"On 14 March 2017, the Company entered into an agreement with AFS Ventures Plc (in liquidation) pursuant to which it agreed to pay the sum of £493,000 by way of further consideration for the purchase of certain intellectual property rights within 12 months (so by 13 March 2018). The Company has not
made any such payment either by the date it was due or since."

As such, say the liquidators, the company was unable to pay its debts as they fell due from 10 January 2017 and they consider Mr Frost knew or should have known this was so.

"The above matters are based upon the proofs of debt received to date. A number of creditors have not yet submitted proofs of debt and, as such, it is anticipated that there will be numerous further examples of the Company's inability to pay its debts. [The liquidators] further reserve their position as to when the Company became insolvent on a balance sheet basis (indeed if it was ever so) as there appears to be significant doubt about the value of the Company's assets."

It is explained that Mr Frost was also a trustee of such of the Company's property as was in his possession or control, including the Company's money, and he owed fiduciary duties to the Company in that capacity.

The liquidators then outline the basis upon which they consider that the Avocet chairman had breached his duties to the company and the consequences of such breaches.

In a judgment delivered last week, District Judge Royle ruled that Mr Frost had indeed breached fiduciary duties by using money from the business to pay for the two Scarborough apartments.

According to the judge: "There is nothing before me which persuades me that the payments were made other than in breach of Mr Frost's duties as a director. There is, as Mr (Steven) Fennell [counsel for the liquidators] has pointed out, no proper evidence of shareholder approval, board approval, or that Mr Frost did anything other than use monies invested in Omega".

In a witness statement dated May 16th, 2023, Mr Frost hit out at the application to have the flats repossessed.

He wrote: "I admit that in recent weeks I have worked with retired UK judicial members, retired counsel and solicitors, the UN in Geneva, US authorities in Wilmington and members of the Israeli intelligence services to proffer fact finds on (a named solicitor) and the liquidators of Omega Infinite PLC.

"Such fact finds do reveal that (a named solicitor) and the liquidators fabricate evidence to mislead Leeds High Court - details of which are due to be privately given to the UK PM next week along with Leeds High Court".

Reporter axes housing site near Abbotsford again

by LESTER CROSS

The 500 objectors who voiced their dissent against a proposal to build 45 houses close to renowned author Sir Walter Scott's home at Abbotsford House will no doubt be overjoyed after a Scottish Government planning reporter ordered the site should be removed from the Borders Local Development Plan [LDP] for a third time.

Scottish Borders Council had included the land at Netherbarns, on the outskirts of Galashiels, in their new LDP even though it had been rejected at previous examinations.

But reporter Nick Smith and his team who have spent the best part of a year examining development sites across the Borders region have concluded that even with additional mitigation measures a detrimental impact on Abbotsford might not be avoided.

The council rejected the written objections which flooded in from around the world when Netherbarns was included in the proposed LDP yet again.

Typical of the condemnation because of the perceived threat to Scott's home was the submission from Douglas Pringle, an attorney based in Wichita, Kansas, who is president of the wealthy K T Wiedemann Foundation. The organisation has donated well over $150,000 to the Abbotsford Trust to help with restoration of the house and its outstanding collection of Scott books and artefacts. 

Mr Pringle told SBC in his objection letter on behalf of the Foundation: "The [Netherbarns] proposals have a highly negative impact on Abbotsford. It would be a pity to see this idyllic setting destroyed by this project".

And Abbotsford chief executive Giles Ingram wrote: "We hope we can forestall the site's inclusion in future LDPs by putting forward our case, now and forever, on the detrimental impact of a development at Netherbarns on Abbotsford, the jewel in the crown of the Borders".

In the 1150-page Examination report on the Borders LDP, Mr Smith writes: "It is acknowledged that the site has a history and has previously been omitted from the Plan by Reporters from the Scottish Government. However, it is not uncommon for submissions to be made again for sites that have been dismissed previously. What needs to be considered is whether there are any new material considerations and amendments to the proposal which have not previously been tabled which could justify the site being considered for inclusion within the Plan.

"In respect of these new proposals, amongst other matters it is noted that the location for the proposed houses are on a different part of the overall site compared to submissions previously. No development is now proposed on the larger eastern part of the site closest to Abbotsford House and more new planting is proposed throughout the site to screen it further. Taking these points into consideration there is no doubt that this new amended proposal has not been subject to previous Examination and it is entirely inaccurate to state otherwise. Consequently the new amended proposal has the right to be considered for inclusion within the LDP as is the case for all other proposals for other sites across the region which offer new material changes which have not previously been subject to Examination."

But the reporter said he concurred with the conclusions reached at the previous local plan inquiry.

"It appears to me that cultural and landscape considerations combine to provide an asset which should remain free of the impact of the suggested allocation and any subsequent development of Netherbarns. I do not accept that the woodland screening would adequately mitigate the adverse impacts of the allocation on the setting of the house or the designed landscape. Additionally, the re-opening of the railway link to Galashiels is likely to increase the volume of visitors to Abbotsford, therefore further strengthening the need to protect the heritage of the vicinity. On this basis, I conclude the allocation, including the somewhat obscure reference to educational facilities, should be removed from the proposed plan."

Mr Smith explained that during a visit in October 2022, when the trees were still in leaf, he could not see the site itself when looking from the house, its terraces or the parkland next to the river. However, when he returned in January 2023, he could clearly see the grass within the site through the bare trees. He could also see existing houses at Abbotsview to the northeast of the site. 

"Given the historic and cultural importance of Abbotsford House, I do not consider mitigation which seeks to minimise the adverse effects of the proposed development to be sufficient. The design code suggested in the heritage statement indicates that a range of detailed interventions would potentially be required to help make the development acceptable.

"I do not consider that such interventions could be guaranteed as part of an allocation in a local development plan. The council refers to the recent visitor centre as an example of a modern development which has been built within the grounds of Abbotsford House. It is not the role of this examination to assess the merits or otherwise of the visitor centre. However, as this building has no impact on views across the River Tweed from the principal rooms of Abbotsford House or the landscaped terraces and grounds to the north of the house, I do not consider its effects to be directly comparable. 

"I conclude that allocation AGALA029 [Netherbarns] has the potential to have an adverse impact on the setting of Abbotsford House and on its designed landscape. Reporter’s recommendations: Modify the local development plan by: deleting allocation Netherbarns from the table on proposed plan page 345 of the Galashiels settlement profile and from the Galashiels settlement map".

Frosts' evidence 'dense' and 'intensely challenging' - judge

EXCLUSIVE by OUR COURT REPORTERS

The evidence provided by business associates of 'controversial entrepreneur' Martin Frost has attracted strong criticism in a court judgment which concluded the former Avocet Group chairman used £425,000 of company funds to bankroll property acquisitions in Scarborough.

The bankrupt joint life president of Genfro Ltd., seen as a successor to the failed Avocet 'wonder fuel' operation was deemed to have breached his fiduciary duties as a company director by transferring substantial sums of shareholders' money from the coffers of the now insolvent Omega Infinite PLC into one of his personal bank accounts before it was used to buy two flats.

In a bid to head off an application from Omega's joint liquidators who are attempting to repossess the apartments on the Yorkshire resort's Esplanade, Mr Frost submitted statements and bundles of written evidence including contributions from Eirlys Lloyd, barrister and former company secretary of several Avocet businesses, and from Michael Robinson, a fellow company director.

However, District Judge Christopher Royle, who delivered judgment in the case at Leeds court, appears to have been less than impressed by the assertions made by Ms Lloyd and Mr Robinson.

The judge notes: "I will observe that the Frosts' material is of very significant length, very dense, and is (in certain regards) best described as intensely challenging."

In a scathing dismissal of Mr Frost's evidence, Judge Royle declares: "The vast majority of Mr Frost's statement does not go to the issues at all. Instead, it deals, in prolix terms, with matters such as he and Mrs. Frost's dissatisfaction with threats of visits from Mrs. Frost's wider family, an alleged falling out between Mrs. Frost and others in the Orr family, historical litigation in Delaware said to involve Omega (then Avocet), and some (irrelevant) history of Mr Frost's career.

"The statement goes on to advance three contentions of which only one has any potential relevance to the issues before me. The other two are an assertion that Omega was not "cash book insolvent" on 30th March 2020 (which is irrelevant in light of the winding-up order), and an assertion that there is an "ongoing plot to denigrate Martin Frost and Avocet", which does not touch on the questions I have to answer at all."

Judge Royle then says: "Insofar as Mr Frost then goes on to make assertions of fabrication and fraud against various individuals, those are entirely unsupported by documentary or other evidence and I reject them."

The court had before it statements from Michael Robinson, a director of Loch Lomond Heritage, the company which Mr Frost claimed (unsuccessfully) owned the Scarborough properties.

According to the judgment: "Michael Robinson, a director of Heritage, gave two statements. The first  simply says that he accepts the "broad thrust" of Mr Frost's evidence. I pause to wonder whether those were his own words given the similarity between that and Mrs. Frost's evidence, and the remarkable coincidence of format between those two statements, that of Mrs Frost, and Mr Robinson's second statement. As I have not heard submissions on the point, I shall say no more about it."

The judge says he also paused to note that none of the first three of those statements has a statement of truth which would, of itself, be grounds for disregarding them. Mr Robinson's second statement was mostly definitional; insofar as those definitions assert facts, there was no documentary evidence to support them and 'I reject them'.

Judge Royle then considered the content of so-called Bundle B, one of a number of collections of documents submitted in evidence during the course of proceedings.

He states: "Bundle B contains, in the main, dense narrative allegations by someone named Eirlys Lloyd, to whom I shall shortly refer. From "Report One" it appears this individual was the company secretary of Omega. Accordingly the reports are in no way independent."

After reading Bundle B, Judge Royle says he agrees with Steven Fennell [counsel for Omega's joint liquidators] and his clients that it was irrelevant. 

"It contains a series of "reports" by someone claiming to be a retired Scots Barrister, none of which seem germane to my enquiry, which make serious, but apparently unsubstantiated, claims about professionals of one variety or another for which there are other forums if they are to be pursued, which are unnecessarily prolix, dense, and of no apparent utility to the decision I have to make. 

"The reports give the distinct impression that the author has some deeply­ felt antipathy to insolvency professionals and those who work with them. None has a statement of truth. They are simply opinions without supporting documentation. (None of the "Inventory of Productions", which I take to be akin to exhibits, in fact has any attached or exhibited documents). The production of Bundle B as material the Frosts wanted me to read was, save for the exceptions below, a grotesque waste of the Court's time and that of the Applicants".

In a reference to the Frosts' bankrupt status, the judgment notes their discharge from bankruptcy had been suspended by order of District Judge Anesh Pema made on 20th March 2023. 

"Perusal of the judgment reveals that he considered neither of the Frosts were properly co-operating with the Trustee in Bankruptcy. He observed that 'none of the limited answers have been provided [to the Trustee] have been provided in a simple or straightforward way'. For reasons I shall return to, that is a modus operandi which Mr Frost adopted before me also."

'Visionary' businessman used company's cash to buy flats

SPECIAL EXCLUSIVE by our COURT REPORTERS

Martin Frost, the former chairman of the now insolvent Avocet group of businesses, breached his fiduciary duty as a company director by using £425,000 of the firm's cash to help buy two upmarket flats in Scarborough, a judge has ruled.

In a damning written judgment handed down in the Leeds courts, District Judge Christopher Royle dismissed evidence submitted by Mr Frost and his supporters as inconsistent, largely irrelevant and tediously lengthy.

The successful claim by the joint liquidators of Omega Infinite PLC, the former parent of the Avocet group, is a significant step in the insolvency team's bid to repossess the Scarborough properties from Mr Frost and his wife Janet. Both Mr and Mrs Frost were declared bankrupt in 2021.

Court papers lodged by liquidators Joanne Hammond and Ashleigh Fletcher, of specialist firm Begbies Traynor, also allege that company money was used by the Frosts to pay for holidays and luxury travel.

A witness statement submitted by Miss Hammond included details of four payments, all of them originating from Omega and with each sum made to a Royal Bank of Scotland account in Mr Frost's name. The amounts were for £150,000 on September 27th, 2017, £145,000 the following day, and separate transactions of £50,000 and £80,000 both completed on April 26th, 2018.

The transfers took place around the time the flats, numbered 2 and 4, in Scarborough's 57 Belvedere, The Esplanade changed hands into the ownership of Mr Frost. His assertion that the properties are in fact owned by a company called Loch Lomond Heritage of which he was a director, was also rejected by Judge Royle.

Mr Frost had argued that  he was effectively withdrawing and spending his own money. 

According to the judgment: "The fact that he [Mr Frost] had invested significantly in Omega in some way entitled him to make those payments. He said that he put in roughly £9m, part of which had been share capital. Eventually a lot of share capital was converted to loans, and he had "about £6m" of "off-balance sheet loans" by early 2017, by which he said he meant that Omega was using equipment owned by him in its business."

Mr Frost also claimed Omega's shareholders were aware that he was not drawing a salary to which he was entitled (though he did not quantify that salary), and he was also lending money to Omega.

According to Judge Royle: "It is a breach of Mr Frost's fiduciary duties to make substantial payments out of Omega's resources without board and/or shareholder approval or ratification according to Mr [Steven]Fennell (counsel for the applicants). I agree.

"Nor is there any accounting or documentary evidence to support the substantial figure of £6,139,220 he advances in his witness statement. Insofar as Mr Frost relied on audited accounts, no complete document was provided to me and I decline to allow his reliance on the same. Nor is there proper evidence of board or shareholder approval or ratification. I accordingly reject that proposition."

And in a further put down of Mr Frost's evidence, the judge states: "As to the purpose of the transfers, if they were not for Omega's legitimate purposes when made, it does not seem to me to be open to Mr Frost to attempt to re-classify them after the fact. It was for Mr Frost to explain those payments. On their face they appear to have been for the purchase of real property in his name. Such re-classification seems to me to be what he appears to be trying to do.

"In any event, it is no explanation for an apparent dissipation of Omega's funds to say that those funds arose from Mr Frost's investment. By definition, such funds are Omega's funds, not Mr Frost's funds. For similar reasons, I reject the suggestion that his lack of salary (of which there is no evidence as to quantum) justifies such payments from Omega's resources.

"Even if the Frosts were, at the material times, significant creditors of Omega, for similar reasons that makes no difference. As it is, there is no sufficient evidence which persuades me that they were."

There was nothing before the judge which persuaded him that the payments were made other than in breach of Mr Frost's duties as a director. There was, as Mr Fennell had pointed out, no proper evidence of shareholder approval, board approval, or that Mr Frost did anything other than use monies invested in Omega.

"I hold that Mr Frost has failed to justify the four payments out of the Omega account into the RBS account which are the subject of this application. It seems to me that his understanding of what was Omega's money and what was his own is sufficiently fluid that even he does not understand (and thus cannot explain) where the distinction lies."

Having concluded that Mr Frost paid out a total of £425,000 of Omega's money in breach of his fiduciary (and, no doubt also, other director's) duties, Judge Royle said he must now analyse whether that money could be traced into the equity in the flats as the applicants had suggested.

The judgment continues: "Even where there are mixed funds, as here in the RBS account, all other things being equal, Omega remains entitled to assert a proprietary claim.

"Where the other contributor to the mixed fund is at fault (as here, being Mr Frost), it is for Mr Frost to distinguish which money was his and which was Omegas otherwise the money is presumed to belong to the innocent party (here, Omega).

"To the extent that a trustee (here Mr Frost) pays a claimant's money (here, Omega's) into an overdrawn bank account is generally to render the money untraceable. Whilst a change of position by the trustee (or some other inequitability in a claimant's claim) may act as a defence, nothing has been suggested by Mr Frost which would found such a defence."

Judge Royle concludes that: a) Omega had a distinct identifiable title to the £295,000 which was paid into the RBS account in breach of fiduciary duty and was entitled to trace that sum into the equity of Flat 2. b) All but the pre-existing credit balance in the RBS account at the time the £295,000 arrived was undoubtedly Omega money. So, at least £280,000 can be traced into the equity in Flat 2.

"The same result obtains in relation to Flat 4 for the same reasons. Given the payments from Omega's account to the RBS account in relation to this flat partly discharged an extant overdraft, I hold that at least £125,446.96p of the money paid by Omega into the RBS account went toward acquiring Flat 4."

Mr Frost has been quick to give his version of events at Thursday's court hearing.

In his capacity as Joint Life President of Genfro Ltd., an apparent successor of Omega, he sent the following communication to shareholders: "Begbies were partially successful against Janet and I in that the Leeds High Court upheld Begbies debt narrative upon which Judge Geddes gave my and Janet's bankruptcy orders.

"Begbies secured a possession order upon Flat 4 but on Flat 2 (where Janet and I live) a possession order was refused. That said, contrary to Begbies wishes their action was stayed for an extended period to allow Janet and I to appeal. Janet and I left Leeds happy".

But a long-suffering investor in Avocet's 'mythical' green fuel, commenting on the judgment, told us: "This is a ground-breaking decision in that, for the first time in a court of law a judge has found that Frost breached his fiduciary duty as a director by misappropriating company funds for his own personal use.  

"This should be an absolute gift to law enforcers as an embezzlement case now appears to be substantially proven, and should be of some solace to the Avocet shareholders and creditors who have long been Frost's unwitting victims." 

Council to seek Tweedbank development partner...next year

by LESTER CROSS

The quest to identify a development partner for the £108 million expansion of Tweedbank will begin in earnest during 2024, more than five years after Scottish Borders Council acquired the 110-acres of land for the project by paying the landowners £9.6 million. 

A land audit produced by the local authority in 2019 included a housebuilding timetable for the site on Lowood estate, alongside Tweedbank village. The first 30 houses from a total of around 300 would be delivered in 2023, according to the audit. But the building programme is already well behind that particular schedule.

Last Friday, SBC published a so-called PIN [Prior Information Notice] on the Scottish Public Contracts website. It revealed that the council would be "inviting interested parties to participate in a market research exercise which will inform the development of the procurement approach to appoint a Development Partner to work with the Council to deliver its Tweedbank project."

The notice explained the Tweedbank project consisted of the development of 34 hectares of land adjacent to the existing settlement of Tweedbank over a 10–15-year period.

According to the PIN it is anticipated that the project will deliver: Infrastructure - road access with active travel links Energy - a heat and energy network with renewable generation. Homes - approx. 300-400 homes of varied size and tenure. Care facilities - a 60 bed care village. Community facilities - including a community centre and play park. Business - business and innovation space to support local economic development.

The notice adds: "This market consultation exercise is an exciting opportunity for potential bidders to participate in shaping the Council’s procurement strategy and gain insight into the proposed development strategy. Estimated date of publication of contract notice: 26/02/2024."

But the entire project will have to rely on extensive external investment.

And Borders councillors were told in March that since a report prepared by estate agents Savills, the economic climate had continued to remain uncertain. 

"There has been continued and significant inflationary increases on construction costs, alongside rising interest rates, making borrowing and servicing debt more challenging", warned a document drawn up by council officers. "Both factors have consequentially impacted the housing market hampering action to accommodate increasing demand for homes across the Scottish Borders and in particular in the Central Borders."

 Alongside Savills advice, site soft market testing was undertaken with three established developers in August 2022. They agreed that the Lowood estate was a unique development opportunity but up-front funding and delivery of key infrastructure (access road, power and drainage) would be critical to success. 

Those unnamed developers had agreed that development should be phased to reflect the market conditions and highlighted a number of opportunities to improve the zoning and delivery of the Tweedbank scheme.

"All three developers expressed interest in providing further development advice potentially as a development partner. It is recognised that to enable development to progress, Scottish Borders Council need to take action with public sector partners to de-risk development by forward investing in key infrastructure. On greenfield development sites, the logistics and costs of enabling infrastructure is a significant factor in development appraisals, typically accounting for 15- 25% of the overall development cost."

Based on the total estimated cost of £108 million, the council could be faced with infrastructure costs ranging from £16 million to £27 million.

SBC's Delivery Plan for the Tweedbank expansion involves the development of a procurement strategy in order to secure a development partner. 

"This is likely to be a two-stage procurement. During the first stage, they would work with the Council through the pre-development period to progress the design and further technical work as well as exploring a range of commercial and delivery options.

"The first stage is likely to include a detailed access and transport assessment, site investigations, utilities and servicing strategy and will lead to development project plan and phasing strategy, cost plan and finally a revised business case."

The recent report to council explained: "The revised business case is necessary due to the change in market conditions and to support any future funding bids given the significant funding shortfall. Following approval by Scottish Borders Council, the revised business case will be submitted the Edinburgh & South East Scotland City Region Deal and is likely to seek funding support towards business and housing infrastructure.

"Following completion of the business case, subject to securing appropriate and affordable funding, and on agreement of both parties, stage two of the development partner procurement would move to a phased development and delivery stage, beginning with the construction of primary roads and services infrastructure as part of the ‘Infrastructure First’ approach proposed."