Liquidators not giving up despite court defeat

EXCLUSIVE by DOUGLAS SHEPHERD

The joint liquidators of the Isle of Man recycling investment fund which was supposed to build a £23 million waste treatment plant for Scottish Borders Council will continue to quiz the former directors over the loss of £170 million of shareholders' cash.

Alex Adam and David Craine, the liquidators investigating the failure of New Earth Recycling & Renewables (Infrasturucture) [NERR] and two feeder funds have updated creditors in the wake of a decision in the Manx courts. The judge rejected their request to bring NERR directors Michael Richardson and John Bourbon before a court to be examined under oath.

The lengthy and extremely complicated liquidation - so far it has generated more than 200,000 documents - is being funded by the Isle of Man Financial Services Authority (IOMFSA) which has been heavily criticised for an alleged failure to investigate NERR and other investment businesses managed by Premier Group Isle of Man (also insolvent).

In their latest report to creditors Mr Adam and Mr Craine explain: "Further to the winding up of the Company, the appointment of the Joint Liquidators and our earlier updates, the Joint Liquidators write to confirm the outcome of the application to interview Messrs Richardson and Bourbon in Court in relation to their role as two of the controlling minds of the Company.

"Regretfully in a judgement dated 14 January 2019 the Isle of Man Court rejected the Joint Liquidators’ application. The Joint Liquidators are extremely disappointed by this outcome. Such applications are rare (because directors typically cooperate with office holders). In circumstances where the directors had presided over a c £170 million loss to investors and refused to voluntarily attend for oral interview, we had expected that the Court would appreciate the office holders’ understandable desire to ensure that matters were not delayed further than was absolutely necessary."

Unfortunately, the Court ruled that the Joint Liquidators had not sufficiently demonstrated that there was no alternative other than an oral examination.

But the report adds: "Whilst we do not agree, when the Court exercises its discretion in such matters there is little prospect of a successful appeal and, in any case, any appeal would result in further delay.

"Nevertheless, the Joint Liquidators remain committed to fully investigating the circumstances which led to the failure of NERR (and its feeder funds) and will continue to seek to obtain information from the directors through written correspondence. Unfortunately, this process is now likely to be more protracted and costly than oral interviews. It is worth noting that the Court has left open a further application in the future, should written correspondence prove ineffective."

Scottish Borders Council's involvement in a multi-million pounds contract with waste treatment specialists New Earth Solutions (also insolvent and now dissolved) and their investment partners NERR cost local taxpayers at least £2.5 million.

The cash was spent - mainly on expensive consultants and lawyers - between 2011 and 2015 in a vain attempt to deliver the urgently needed treatment facility for Borders rubbish at Easter Langlee, Galashiels. The project had to be abandoned when New Earth Solutions could not provide fit for purpose technology and NERR failed to come up with the cash.

The fact that NES, NERR and Premier Group are all now bankrupt tells its own story. And yet the regulatory authorities here in Scotland, including Audit Scotland, refused to investigate the council's actions throughout the sorry saga.