High Street GRP Ltd Administration.
Following on from the Notice Of Intention to File For Administration which we covered in this article – LINK on 8th November 2021, High Street GRP Ltd went to the High Court in London a few days later seeking to put itself into administration. The Administration Order was not granted by the Judge at the hearing and the case was adjourned to be heard again in December.
A request by a company for an Administration Order is normally a formality. The Company Director submits a Witness Statement stating that the company is insolvent and that the best outcome for creditors is that the company is put into administration. The Witness Statement is supported by Exhibits (an evidence pack). The director’s chosen administrator submits a Witness Statement backing up the director’s claims and confirming they are willing to be appointed.
There are a number of reasons why a Judge would delay granting an Order at the first hearing. They are typically:
1. The company made a procedural error when filing the application which needs to be corrected;
2. The company has not satisfied the Judge that an administration is the best course of action and is given more time to improve its case;
3. The company has provided too much information for the Judge to be able read in the time alloted for the hearing;
4. The company has not given objectors enough time to review the company’s submission and to prepare and file a counter-argument.
We don’t know the reason why the Judge adjourned the hearing, but we do know that the Witness Statement and Exhibits submitted by the director Gary Forrest were provided very late. We also know there are parties objecting to the administration application and they would have had very little time to prepare their counter-arguments and to highlight discrepancies, inaccuracies and omissions in the company’s case.
Our article last week also flushed out the double-dealing of some of the self-appointed leaders of a bondholder group. We had heard that a small group of bondholders was seeking to use its position as leaders of the group to get refunds for themselves. Tough luck for the rest of the group. We support any investor taking whatever action they feel is necessary to recover their money as long as they are not misleading or abusing other investors in doing so. Putting yourself in a position of influence within a group of investors and then using it to your own advantage is clearly abusing the trust of the investors in that group. The leaders of this particular group have now admitted that they were fully aware High Street GRP was intending to file for administration, but did not tell the rest of the bondholder group.
We see this so many times in Facebook or Whatsapp groups. These groups range from the Alastair Dobbie “investor group” model which uses sales agents who pretend to be investors and they operate a recovery room scam, the Allansons Investor Group model which involves one Supreme Leader who controls everything published in the group ensuring that the perpetrator of the scam is protected from negative comments (in that case investors were misled for almost two years), and the HSG and FRE models where there are self-appointed leadership teams which have their own self-interests at heart.
It will be very interesting to see how the High Street GRP Ltd Administration application progresses. The odds are very much in favour of the company in this scenario. It is difficult for a Judge to declare that a company must continue trading when the directors have declared it to be insolvent. It is also difficult for a Judge to support a liquidation effort by objectors when there may be jobs and livelihoods at risk. An administration seeks to rescue a company as a going concern thereby protecting jobs. A liquidation is closure and the sale of the assets. Judges tend to support administration applications because if the administrator cannot save the business he would be forced to change the status of the company from administration to liquidation anyway.
This is not really a fight between administration and liquidation. This is a fight to stop Gary Forrest appointing administrators who are sympathetic to his cause and who will apply only a light touch to any investigation into his conduct. His administrators are also very unlikely to reverse the transfer of assets which has been taking place in recent months, placing those assets beyond the reach of HSG creditors. This is a fight by small investors against the power of dishonest directors to cover up their wrongdoings.
The administrators proposed by Gary Forrest are Carrie-Ann James of SKSi, and Paul Michael Davies of James Cowper Kreston. Let’s hope they haven’t been advising the company on the transfer of assets prior to their appointment and are determined to make their first task the return of assets to the company over which they’ve been appointed. Let’s also hope we don’t get the standard friendly administrator statement of “having carried out an initial investigation into the conduct of the directors and with consideration to the financial position of the company and the likely benefits to creditors of extending the investigation versus the costs involved, we have determined that it is not in the best interests of creditors to continue investigations into the directors’ conduct”. We’ve seen a version of that statement quite a few times when the administrators are appointed by the directors.
To view an updated article in March 2022 please click this LINK.
High Street GRP Ltd Administration.