Craig Whyte and Vital UK Ltd – The BBC About to Jog his Memory regarding his Disqualification?

Newsnight Scotland on 6th February 2012 will show more about Mr Whyte, unless his lawyers manage to stop the programme.

The programme will include a piece by Mark Daly, whose Inside Story in October brought threats of immediate court action upon the BBC from Mr Whyte (although no action has yet been raised.)

According to the BBC website, they have obtained a transcript of the judgement by which Mr Whyte was banned for seven years from holding a post as a company director.

This has been unobtainable up to now, although it is believed that it was being sought by lawyers acting for One Stop Roofing Supplies in its case against Tixway UK Ltd, a company where Mr Whyte is the sole director.

The BBC report quotes an exchange between Mr Whyte and the QC for One Stop, Alastair Clark.

“In court, he said: “This is going back to matters some time ago. I don’t have any recollection of what it was about just now.”

He was then asked: “You can’t remember why you were banned for seven years?”

Mr Whyte replied: “Well, I’m not going to say in open court and get it wrong.”

The Rangers owner was then asked: “Was it anything to do with the treatment of creditors?”

He replied: “No.”

The decision of Registrar John Simmonds regarding the disqualification was handed down on 13 June 2000.

In it, Registrar Simmonds is stated as having said “the assets of the company (Vital UK) were put out of the reach of the creditors on a somewhat dubious delayed basis”.

The ruling continued: “Shortly after that Mr Whyte put the company into a members’ liquidation disclosing promissory notes as an asset. This seems to me to be a self-seeking action with regard to the company. If this is too harsh, then the degree of recklessness shows Mr Whyte to be thoroughly unfit to be a director.”

Registrar Simmonds’ ruling concluded: “I have heard mitigation from Mr Whyte’s counsel that he is a young man and that some voluntary recompense has been made. There is nothing that I have heard that the self-seeking behaviour and deliberately placing of assets beyond the liquidators that would not make this a middle bracket case and I consider seven years the correct order and I so order.”

I have been trying to get to the bottom of this issue, and have been hugely helped by BillyBhoy68, but alas, we do not have the resources of the BBC.

It is interesting though to look at the paperwork I have been able to find regarding Vital UK Ltd.

I wrote about it here in December. As I wrote then and I apologise for quoting myself extensively:-

Vital UK Limited was incorporated on 15th April 1994 as Vital (UK) Ltd. The name changed to Vital UK Ltd (the brackets having been removed) on 31st August 1994.

On 27th October 1995, the company passed a special resolution (Vital Spec Res) resolving that it should be wound up. The resolution was signed by a “David Anderson”. This was a voluntary liquidation by the members of the company, and as such a Declaration of Solvency (a Form 4.70) had to be completed. The Declaration must:-

  • be based on a full inquiry into the company’s affairs;
  • state that all debts and interest can be paid within 12 months;
  • include an up-to-date statement of the company’s assets and liabilities; and
  • be made by the majority of directors of a company no more than five weeks before the passing of a resolution for voluntary winding-up of a company.

It is a criminal offence to make a declaration of solvency without reasonable grounds.

I have not been able to access the Declaration of Solvency. (But now see below!)

The liquidator was appointed with immediate effect and the relevant papers were received at Companies House on the 2nd November 1995.

The London Gazette of 7th November 1995 reported the appointment of the liquidator. The company was described as a “Dealer in all goods”. The same edition of the Gazette also reported the passing of the Special Resolution.

Vital UK Ltd (in liquidation) then lingered on for far longer than it had existed as a solvent company. The liquidation continued until, finally, the Company was dissolved in 2003.

The liquidator prepared a statement of affairs (Vital Statement of Affairs) detailing the financial position of the company as at 25th October 1996 and produced the statement on 6th November 1996. The liquidator noted that the company would not, despite the terms of the Declaration of Solvency, pay its debts within the required period of one year (which was by this point about to expire).

This disclosed the following:-

The only assets were Bills Receivable with a Book Value of £649,139 but an estimated sum recoverable of only £100,000.

The preferential creditors were as follows; VAT £33,039; PAYE + NIC £279,976.

The estimated trade creditors totalled £66,674.

There was £2 of issued share capital and therefore an estimated shortfall for members of £279,691.

Listed in the creditors is a balance of £40,042 owed to Custom Cleaning Services of Wishart Street in Glasgow. A quick search of Companies House shows that “Custom Cleaning Services Ltd” changed its name in 1996 to CCS 1996 Ltd. This company was wound up in 1998. Amongst its directors were David Anderson, who had signed the Special Resolution to wind up Vital UK Ltd, Craig Whyte and Kenneth McLeod.

Vital UK Ltd had a liquidator appointed on the basis that it could pay its debts. The directors, or at least a majority thereof, put their names to the Declaration of Solvency.

However, once the liquidator discovered that less than one sixth of the bills receivable were likely to be recovered, this made it clear that the debts would not be paid. At that stage the tax man was a preferential creditor, but even he was not getting anything near what he was due.

In fact, bearing in mind the length of the liquidation (and subject to looking at the liquidator’s income and expenditure accounts) I suspect the tax man got back little or nothing. The cost of a liquidation running nearly 7 years would be enormous normally.

On the information available therefore the issues seem to be (a) was the Declaration of Insolvency filled in falsely and (b) why were the bills receivable in the books so far above what the liquidator thought could be recovered.

One wonders too how a cleaning business based in Glasgow came to be owed £40,000 by a company based in Essex. Could there have been an issue here which brought the attention of the Insolvency Service to bear?

—————————-

To bring matters up to speed, I now have a copy of the Declaration of Solvency (thanks BillyBhoy68!)

You can see it here – VitalDeclaration.

It is completed only by the same Mr Anderson who signed the Special Resolution.

Page 3 of the form lists the Company’s assets and liabilities. Interestingly, though I am sure just a clerical error, the declaration states that a statement of affairs up to 31st August, being the latest date practicable, is attached. The statement of affairs is dated 23rd October.

The Company seems to have had little variety of material available to it. The only asset listed is £649,139 of “Bills Receivable”. There are no other assets of any kind listed. This perhaps is what Registrar Simmonds is referring to when he talks about assets being pout out of reach. The only liabilities disclosed are Bills Payable of £56,266 and “Other Liabilities” of £537,503, leaving a surplus of £55,410.

As I detailed above, the recovery from the surprisingly precise figure of “Bills Receivable” was far less, and, according to the BBC, involved the liquidator pursuing “Pelcroft”, stated to be another of Mr Whyte’s companies. (Which is the subject of my next post).

We shall see what the BBC has to add to this – the judgment of the Court sounds damning, ironically as Rangers and Mr Whyte await decisions from the Tax Tribunal and from Sheriff Ross in the Tixway case.

The story has a long way to go before it ends, I feel.

 

Advertisements

3 Comments

Filed under BBC, Craig Whyte's Companies, Football, Insolvency, One Stop Roofing Supplies Ltd v Tixway UK Ltd, Rangers, The Company Directors Disqualification Act 1986.

3 responses to “Craig Whyte and Vital UK Ltd – The BBC About to Jog his Memory regarding his Disqualification?

  1. ramsay smith

    Off topic

    http://www.scotcourts.gov.uk/current/court_announcements.asp

    Livingston, 6 December 2011

    Any connection?

  2. David

    Paul, it’s interesting to note that Mr Anderson’s address in Bellshill is also the same as the registered addresses of HAG 1996 Limited, VPS 1996 Limited, ISS 1996 Limited and Cairnhall Limited all companies of which Craig White was a director. I also note in the EGM referred to in the Special Resolution convened at the same address in Richmond Road, London that was the registered address for CSS 1996 Limited, again Craig Whyte was a director.

    He was pretty busy from middle to end of 1995 seeing that CSS 1996 was incorporated on 28th July, ISS 1996 on 3rd October, VPS 1996 on 1st December and both HAG 1996 & CCS 1996 on 7th December. On top of that he decided to change the name of Vital Security Services Limited to Cairnhall Limited, registered on 21st November.

    Fair bit of activity don’t you think??

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s