Independent Business Reviews
Property Based Assignments
Case Studies of Property Based Assignments
Office Development
- A Law of Property Act Receivership of a part constructed office development on the outskirts of Wigan. The property was valued in its current state at around £2million. We were appointed by a leading building society as a result of mortgage arrears following the corporate borrower entering into Administrative Receivership.
Our strategy focuses upon completion of the development and obtaining suitable property lettings to enhance the final realisation to be achieved on a sale.
Residential Development
- A Law of Property Act Receivership of a residential development in Huddersfield comprising 24 apartments.
Given the state of the UK residential property market, we have, after consultation with our agents, concluded a sales strategy should not be commenced at present. Instead our strategy has focussed on fully letting the development on assured shorthold tenancy agreements and attempting to improve the general tenant profile over that which we inherited on appointment. This provides the appointor (a major UK bank) with significant rent yields to service the existing debt and should provide enhanced returns from a sale when the property market stabilises.
Nursing Homes
- An Administrative Receivership of a group of 16 leasehold nursing and residential care homes operating throughout England and Wales which employed 700 staff. Although this appointment was in 2002, we have received directions from the Court during this year on a particular aspect of this case which are of particular interest.
Following appointment in 2002, the main objective of our appointment was to safeguard the continued operations of the Company’s nursing homes and to preserve any value in the leasehold properties and goodwill of the Company. While continuing to trade the intention was to find a suitable party to whom an assignment of the Company’s leasehold interests in the homes could be made together with a transfer of its trade.
Turnover during the Receivership trading period totalled over £8million. All the leasehold premises were disposed of as operational homes which maximised recoveries and preserved employment for the majority of the workforce.
The secured creditor in this matter asserted that the Company’s book debt proceeds, which totalled over £600,000 were subject to their fixed charge security created by their debentures as not only did the creditor have the right to control the receipt of the proceeds but it actively exercised that control.
Given that there was no established precedents which challenged the House of Lords ruling, we applied to Court for directions as to whether the book debt proceeds should be distributed to the debenture holder (under their fixed charge) or the preferential creditors, who were owed some £1.3million (in priority to the floating charge).
The Court examined the evidence that we had provided in relation to one of the Nursing homes (by way of example) and concluded that, in relation to the book debt collections for that particular home, the charge was a fixed charge as the debenture holder had exercised the requisite control over the receipt of the book debt proceeds.
The Court further directed that we should review similar evidence in relation to the other Nursing Homes, ascertain whether the degree of control exercised by the debenture holder was the same in respect of all the Homes and serve our determination upon all parties. Following our review, we determined that the majority of the book debt proceeds were subject to the secured creditor’s fixed charge but in certain cases, as insufficient control was exercised, some of the proceeds should be made available to the preferential creditors.
This process has resulted in a significant further distribution being paid to the secured creditor.
Devon Hotel
- Law of Property Act Receivership of what was effectively a development site near Salcombe, Devon. The property comprised a restaurant, part developed hotel and eight apartments (any five of which had planning permission). The disposal of the site was complicated by the lack of parking facilities (a 50 year lease had to be negotiated with adjacent landowners before the property could be sold) and the attempts of the former owner to frustrate any sale. Despite this, the property was sold for £0.5m more than the highest of three valuations in a rapidly deteriorating market.
Hotel
- An Administration of a very well known hotel situated opposite Tintern Abbey. The hotel had been operated (illegally) by a partnership who had to be evicted and who continued to cause considerable disruption to our efforts to trade and subsequently sell the property, which was eventually achieved after the premises had been mothballed after almost a year of trading. The background to the Administration was a court case in which the partnership alleged conspiracy to defraud against one of the directors and sole shareholder, a case the partners eventually won although we understand the decision is to be appealed.
Geoffrey Martin & Co. LEEDS T. 0113 244 5141 LONDON T. 0207 495 1100 E. info@geoffreymartin.co.uk