Tag Archives: Vital UK Ltd

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.

 

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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.

Closer to Discovering Why Craig Whyte was Disqualified from being a Director?

Phil Mac Giolla Bhain posted earlier about the Rangers declaration to the PLUS SX regarding Mr Craig Whyte’s disqualification. As is usually the case on his blog, there was much detail behind the matter on which he was speculating – Mr Whyte’s disqualification.

It has not been easy to pin down what Mr Whyte actually did to earn his seven year disqualification. He has referred to it as being due to a “technicality”.

I penned some thoughts about what the extent of the “technicality” might be.

Phil’s post tried to ascertain exactly which company the disqualification related to, and it was suggested that possibly it was not in connection with Vital UK Ltd, Company Number 02919664. This company was incorporated in 1994 and dissolved in 2003. As a Liquidator ran the company from appointment in November 1995 until dissolution, at first sight it seemed unlikely that it was this company at the root of Mr Whyte’s problems. The records I saw did not disclose him as having been a director (in fact the records I saw identified none of them. It seemed less likely, in view of the matters below, that the affairs of a company which only existed, pre liquidation, for 18 months, could have led to a disqualification being imposed almost 4 years later

Mr Whyte however was definitely a director of Vital Plant Services Ltd, Company Number 03122782 – dissolved as of 29th Jan 2002; Vital Holdings Ltd, Company Number 03099824 – dissolved as of 26th Apr 2005 and Vital Security Ltd., Company Number 03122730 – dissolved as of 18th Apr 2000.

As Phil indicated, all three of those companies had Craig Whyte and Kenneth McLeod, the accountant discussed by the BBC, as directors. In addition Vital Security had as a director Kevin Sykes, the convicted fraudster. There are two Kevin Gordon Sykes listed on the register of Disqualified Directors.

One was disqualified on 5th April 2001 until 4th April 2016 under section 6 of the Company Directors Disqualification Act 1996. This relates to disqualification of unfit directors of insolvent companies.

The ban for the other Mr Sykes (or the second disqualification for the same man) runs from 2nd November 2005 until 1st November 2020 and is under section 2, which deals with convictions for indictable offences.

All of the above, and the apparent time line, might have suggested that it was in fact Vital Security where Mr Whyte’s disqualification stemmed from. It was that company’s employees who were referred to in the BBC programme as having not been paid wages when the company failed. All of the above seemed entirely credible and hung together to my eyes.

One of the wise posters “sorrynocando” on the Rangers Tax Case Blog suggested that in fact it was Vital UK Ltd from which the disqualification stemmed.

Therefore I had a bit more of a look at that company.

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 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.

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 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.

So where does this take us? Are we any nearer to working out why Mr Whyte received a seven year ban?

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.

Both factors could, for example, have been as a result of a major debtor failing, and indeed the London Gazette records an application by Vital UK Ltd to wind up another company.

But such an event would not normally lead to a disqualification of a director.

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?

Mr Whyte has it in his power to explain what he was disqualified for. Is his fear that the reasons are actually worse than people are imagining? Maybe one day he will tell us.                         

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Filed under Courts, Insolvency, Rangers, The Company Directors Disqualification Act 1986.