AssetCo, the owners of London and Lincolnshire’s fire engines will go under on Monday, owing a staggering £140m to creditors unless a take over deal is agreed in the next 48 hours, a registrar’s hearing was told on Thursday evening.
In an extraordinary move in advance of Monday’s Companies Court hearing to examine thecompany being liquidated or going into administration, directors of AssetCo , lawyers, and investment bankers sought to grab £86,000 in fees before the company went bust.
Matthew Parfitt, lawyer acting for AssetCo, revealed that lawyers and investment bankers working on potential take over bid said they would ” down tools” or ” down pens” on saving the company unless the Registrar, Mr Briggs, validated fee payments immediately.
He said two directors, Tudor Davies and Tim Barrett, threatened to quit the company today (Fri) unless the court authorised payments of £25,000 for a week’s work and up to £1000 for expenses for hotel bills and meals. It was revealed Mr Davies is charging AssetCo £3000 a day for his work and Mr Barrett £2000 a day.
Mr Adam Goodison, acting for creditors Northern Bank, owed over £1.3m, revealed the figures, when he opposed any move to pay out the cash. He speculated whether there was ” panic among the professionals working for the company ” that had made them seek this order. Other creditors were sitting in the Room 412 at the High Court to observe what was happening to their money.
Mr Briggs described Assetco’s submission as ” extremely unattractive” and agreed with Mr Goodison that the company was putting ” a gun to the head of the court” by threatening to ” down tools”unless they received ” a substantial amount of cash.”
He refused to authorise the payments saying ” he hoped the gun will now not go off.” Instead he adjourned any decision to Monday’s hearing which stopped directors getting preferential treatment.
The scale of AssetCo’s woes were revealed in a submission from Mr Parfitt. They show that on Monday it could go down owing between £117m and £140m and that money was disappearing on a daily basis.
Among the major new creditors are state owned Halifax Bank of Scotland which is owed £12m and energy company, EDF, which suggests AssetCo may not have paid fuel bills for premises they run in London. Others include FD Direct, the Inland Revenue.
He tried to talk up the one unnamed bidder still said to be in advanced talks saying the deal would mean all creditors would be paid in full ,all bank loans restructured and the company recapitalised. But his statement to the court means that four out of five potential bidders have now walked out.
Mr Briggs queried why in these circumstances the company had not give in confidence details of the bid to the court – which happens in similar cases- so the court could decide itself.
Mr Goodison went further: ” If this deal is so wonderful why is there any need for this order and it would be unnecessary if it goes ahead.”
Then he detailed the demands for payment. They included a £25,000 flat weekly fee from a foreign investment bank which will get hundreds of thousands of pounds from a success fee if it goes ahead and £36,000 to a firm of solicitors that has drawn up the plan for administration.
The only people who came out well were Mr Parfitt and Mr Goodison who declined to take costs for the 90 minute hearing.
Matt Wrack, FBU General secretary said: “The demands the directors and advisors made to the court beggar belief.
“The London and Lincolnshire fire brigades do not own their fire engines and kit and are in crisis because they privatized all of their operational assets. Both brigades, the Mayor of London and Government have shown extraordinary complacency.
“The entire operational assets of both brigades could be seized by creditors and sold off in full or in part. Neither brigade appears to have any fallback plan of any credibility.
“The foolish decision to privatize all fire engines and kit leaves them sitting on the sidelines with no power over what happens to their critical operational assets.
“What was put before the court is a public scandal and makes clear in whose interest private companies work. Yet the only people making an issue out of it are the firefighters on the ground who do care about what happens and the impact it could have on public safety.
“There must be an end to privatization in any critical emergency service.”
My comment on this is simple. Apart from this being another example of City directors blatantly trying to fill up their boots with oodles of cash at the expense of other people , questions must be asked about all the people who agreed that this company should be given multi million pound contracts. In London I am afraid this includes Labour mayoral candidate Ken Livingstone and Val Shawcross ( he declined to give a quote to me for a Tribune article this week), Boris Johnson and Brian Coleman, chair of the fire authority, who extended AssetCo’s role. In Lincolnshire I am told senior officials were involved with the firm and then there are all the former fire chiefs who taken jobs with them.
AssetCo shares dropped nearly 13 per cent today to an all time low of 2.22p making it worth just £5.77m. If on Monday AssetCo goes down, there must be an official inquiry.