DFL022 (was PBL135) Student Block A Huddersfield - SUSPENDED

Cheers, never saw that one, I was in this loan but based on what I have read I will consider myself lucky if I just lose ALL my investment in this one and dont end up somehow owing money to RSM >.< looks like a complete and utter cluster.. fudge...

The original article is from the local press who have been writing regularly on the subject. No mention that the blocks were due to exchange contracts on a sale in June, though I suspect that hasnt happened.

CR-2020-LDS-****** *Borrowing Company* (In Administration)
Before DHCJ Sutcliffe QC
Sitting as a Judge of the High Court
In the Business and Property Courts In Leeds

Friday 30th October 2020

This was an application by the Administrators of the borrowing company to request the court orders that the method of remuneration for the administrators be on a “time properly spent basis”. The court was told the other methods were on a fixed fee basis or a percentage of assets realised.

Mr *L, a lay person, on behalf of the respondents, the creditors committee, resisted the application.

The hearing started at 10.30 and was adjourned shortly after starting to allow counsel for the Administrators to read and take instructions upon a letter that Mr *L had sent to the court “some time yesterday”.

Upon resumption of the hearing the judge described the letter as “well expressed and cogent” and said if his understanding was correct the respondents seek an adjournment on the basis that it’s not suitable to fix the basis of remuneration today. Mr Matthew Weaver, counsel for the Administrators said he resisted the application for adjournment as having read the “many complaints” detailed in the letter, they seemed to be aimed at the quantum rather than the basis of the remuneration.

The judge ruled that the application was ready for hearing and that costs would be incurred by delaying proceedings. Describing this as “obviously a complicated matter” the judge allowed a short adjournment as the allocated time slot of 30 minutes was coming to an end. The judge encouraged Mr *L to speak to Mr Weaver on the phone during the adjournment as there might be “some benefit” to this.

Having adjourned at 11.00am the hearing resumed at 3pm.

In describing some background to the matter Mr Weaver told the court that the Administrators had attempted to sell the building and had received 10 bids from 86 interested parties. The court was told the preferred bidder had dropped out in March 2020, for reasons partly connected with Covid-19 including an anticipated decline in student occupancy numbers and issues with finance. The administrators were in the “middle of negotiations” however for reasons of commercial sensitivity no further details were revealed to the court.

Mr Weaver submitted that the creditors committee had been asked to decide the basis of remuneration but had failed to do. The court was told the committee was made up of four members, all of whom were part of a larger class of some 150 secured creditors who had an “equitable lien” in the charged property in the form of UN1 notices. Mr *L explained that the company had been placed into administration “days” before completion of the leasehold sale.

Mr Weaver told the court that the “practical reality” of the matter was that SSSHL ranked first with a fixed charge over the property and were already facing a “significant shortfall” thus “no one other than SSSHL would get funds”.

Mr *L submitted to the court that the respondents resisted the application because of an apparent conflict of interest. He explained that Mr Damian Webb had been an Administrator of this company and therefore "was privy" to all the documents and company records before becoming an administrator of Lendy Ltd, one of the charge holders. Mr Weaver responded by explaining Mr Webb had “resigned immediately” upon engagement with the Lendy matter and that so-called ‘Chinese walls’ had been set-up to prevent information leaking between teams.

Mr Weaver also explained that the conflict of interest had been considered and was why specific ‘conflict administrators’ had been appointed in this matter. Mr *L told the court that the conflicts mentioned were under active consideration by the Insolvency Ombudsman service following a complaint.

Mr *L further submitted that they resisted the application because of the lack of a proper investigation into the circumstances of the administration. In response Mr Weaver stated that investigations had and were being carried out and may not necessarily bear any fruit.

The judge explained that this was an application to fix the basis of the remuneration and that there is a time to challenge the quantum but that was not now.

Mr *L further submitted that they had an arguable case that SSSHL should not in fact rank first and that there “was more to this than meets the eye”. The argument was not fully developed but the judge agreed that he felt he “was at the tip of the iceberg”.

The judge granted the application that the remuneration be on the basis of time properly spent and the hearing ended at 16.25. Costs of the application to be costs of the administration.

Opinion
One hundred and fifty investors stand to lose the whole of their investment - it's clear to see why they they are putting up a fight. Mr *L might have not been able to hit the nail on the head in today's hearing but I'm sure they'll be hammering out the details in a courtroom soon.