Background

A series of companies registered in the British Virgin Islands were special purpose vehicles holding properties worth over £70 million; these properties had been transferred to connected companies, prior to FRP’s appointment as liquidators. The companies owed substantial amounts in business rates, and as a result the affected Council took steps to wind up the companies.

Action

Following our appointment as liquidators, the FRP team investigated the companies’ former properties including their transfer to the connected companies, their proposed redevelopment and business rates liabilities. In addition, the liquidators considered whether due to the existence of mortgages registered against the properties in the name of the connected companies, there was a benefit to creditors in challenging the property transfers.

The team identified that there was a potential benefit and were able to enter into pre-litigation discussions with the connected companies and parties, which ultimately resulted in settlement negotiations.

Outcome

As a result of the team’s investigations, a settlement agreement was reached under which the settling parties contributed sufficient funds to meet all of the costs of the liquidation as well as the known creditor claims and statutory interest. The agreement allowed for the reinstatement of the companies as owners of the properties, and enabled appeals against the business rates liabilities to progress, which also resulted in a refund to one of the companies. The full settlement enabled a reduction in creditor claims and a repayment in full of creditors, with surplus recoveries after payment of all creditors. The properties were transferred to the connected companies and the secured debt novated to the new proprietors, restructuring the companies and properties’ debt.