by OUR BUSINESS CORRESPONDENT
The long-running series of investigations into the collapse of the Avocet fuel additive 'project' now encompasses a probe into the transfer of the Group's intellectual property - an inquiry which could see the former bosses become disqualified directors.
Multiple strands of research are continuing into the failure of Avocet parent business Omega Infinite - unsecured creditors have filed claims totalling £20.36 million so far - and these are outlined in a progress report by joint liquidators involved in a winding up by the court.
It is revealed that insolvency experts Ashleigh Fletcher and Joanne Hammond have been in touch with police in a bid to establish the position regarding an alleged theft relating to Omega's assets and its insurance position.
And there are claims that several shareholdings in the company are not fully paid. Letters have been sent to Omega's shareholders asking them to provide evidence as to how and when their shares were paid up.
Mr Fletcher and Ms Hammond have also spent time liaising with the Insolvency Service and other parties in relation to their enquiries into the company's activities.
Meanwhile, a law firm acting for the liquidators has successfully repossessed one of two upmarket flats on Scarborough's Esplanade which were bought by former Avocet chairman Martin Frost and paid for with £425,000 of the company's cash.
Proceedings are 'ongoing' in a separate application for possession of the second apartment where Mr Frost and his wife Janet - both declared bankrupt in 2021 - have been living.
The joint liquidators obtained copies of forms which had been executed to transfer the flats into Mr Frost's sole name as legal titleholder. However, neither transaction had been registered at HM Land Registry. The court ruled last year that both flats were subject to a constructive trust in favour of Omega, and ordered that they should be transferred to the liquidators.
In addition, the liquidation team has filed claims in the respective Frost bankruptcies in the sum of £2.011 million, excluding interest and costs.
A lengthy Police Scotland investigation into complaints of alleged fraud by Mr Frost while a director of the Avocet Group has yet to be concluded
The 33-page progress report from practitioners Begbies Traynor covers the 12 months up to April of this year by which time the costs associated with time spent on the liquidation had reached £664,164. There are outstanding fees too for specialist firms commissioned by the liquidators.
The Avocet fuel additive patents - worth hundreds of millions of pounds, according to Mr Frost in his overblown sales pitches to potential investors - were transferred to an associated company in December 2018.
The report explains: "The joint liquidators' investigations into the transfer of the IP are still ongoing. These investigations seek to protect the interests of creditors (and the wider public) by identifying and reporting offences which may not lead to recoveries for the estate, but may result in the directors being disqualified".
According to the document, the asset position is complicated by ambiguity regarding ownership, Group structure, and changes made to it.
The report will also have reminded hundreds of investors who, between them, have lost many millions of pounds in the venture fronted by Mr Frost and fellow director Dr James Jennings of the eye-watering riches they were promised from worldwide franchises, each of them set to rake in £1 million for the Group.
In a 2016 Information Memorandum distributed by Mr Frost, he forecast the following revenue figures for Avocet: "2019 £52.016 million; 2020 £122.951 million; 2021 £202.796 million." Bold predictions from a business which was not even trading at the time, and which never brought a single product to market.
The liquidators tell creditors in their latest report they are aware that as part of the agreement for the transfer of the intellectual property the associated company was to pay Omega £1 million per franchise set-up, for each master franchise, and Omega was to receive 30% of the profits generated through seven franchise companies.
Sadly, the report notes: "The joint liquidators confirm no payments have been received in relation to franchises since the commencement of the liquidation.
"It is also apparent that a number of the associated companies have now been dissolved having only ever filed dormant accounts, therefore it is not anticipated that there will be any realisations from the franchise agreements".
As the liquidation process continues, the work so far has "uncovered transactions which require further investigation. The joint liquidators are carrying out an extensive investigation into the reasons for the company's failure and the financial performance of the company".
An investor caught up in what he described as 'a Ponzi scheme from start to finish' praised the liquidators for their tenacity in following up the host of allegations of wrongdoing made against Avocet/Omega management.
He added: "Unfortunately, as we've said before, the authorities supposed to be responsible for the regulation of business activities failed to act and allowed those who ran the Avocet 'project' to continue with their activities for far too long. As a result, the losses to shareholders and creditors spiralled out of control with many of us suffering financial hardship while left frustrated and extremely angry".
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