Lee Bramzell IVA Approved ……… or is it ?
On the afternoon of 29th July 2021, the latest IVA Proposal of Lee Bramzell was approved by the creditors who had been accepted by Purnells Licensed Insolvency Practitioners – LINK to Purnells website.
However, as is becoming standard practice with Mr Bramzell the IVA was not without contentious issues, allegations of misleading creditors and the usual failure to disclose all relevant facts.
This was compounded by the fact that creditors ended up split into five groups.
Group 1 was the Lee Bramzell supporters who had done very well out of their long-term relationship with Shepherd Cox and Lee Bramzell, many of them right from the very beginning. That group did not want Lee Bramzell to be made bankrupt because that could have brought their transactions into the limelight. There have been allegations of favourable treatment, funds being siphoned off, high commissions to introducers etc. This group is characterised by the Ezekiels and their allies, the introducers (those who ran organised investor pitching events) and the facilitators (those who helped establish the SPVs through which people could invest).
Group 2 was the parties involved in the administration of several of the hotels and against whom Lee Bramzell states he is preparing a legal claim e.g Tony Murphy of Harrisons, Elliot Webster of Luqa Ltd, and Peter Shakeshaft of FHG and Minories B Ltd. Luqa Ltd sent an email to Purnells for circulation to creditors alleging that Lee Bramzell had not disclosed all relevant issues and was misleading the creditors. It was sent on 28th July 2021, the day before the hearing. Lee Bramzell replied to it on 29th July 2021 and it was then sent out by Purnells to creditors two hours before the hearing. Nice move. We will return to the disclosure issue because it may well have relevance as to whether or not the IVA approval is to be challenged.
Group 3 was the bulk of creditors who really didn’t know who to believe. There were so many accusations, denials and counter-accusations, that creditors were being asked to vote on the basis of not knowing what was fact and what was fiction. Could Lee Bramzell really rise like a Pheonix and repay them, or was he blagging and they would end up with nothing, or was a bankruptcy the best option so that they would at least get something out of it ? It’s no wonder the majority of them lent towards the Phoenix scenario and supported the IVA proposal. The decision was based on hope more than judgement.
Group 4 was those investors who felt that they had been misled from the moment they gave their money to Lee Bramzell. They wanted to hold him to account. They wanted bankruptcy and an investigation. They also wanted to know the truth about the involvement of the Group 1 creditors and whether there had been any dishonesty. If there had, then the Group 1 investors could potentially be open to legal action.
Group 5 was those creditors whose claims Purnells had declined to recognise at full value. Predominant amongst those was the administrator of six Shepherd Cox hotel companies who was acting on behalf of the creditors of those companies i.e more than 200 room investors who have claims of around £16m. Had Purnells recognised those claims the IVA would have failed miserably and Lee Bramzell would be bankrupt. You can’t fight voting power of £16m+. Purnells chose not to recognise those claims at full value, thereby supporting the person who appointed them. We believe the IVA approval may well be challenged on that point.
Before we move on we should mention the fact that an IVA Proposal must be truthful and include all issues which may have a bearing on the proposer’s ability to deliver on his commitments. An IVA Proposal is a legal document and as such, to falsify or fail to disclose information is a criminal offence.
In Mr Bramzell’s IVA Proposal and in the period between issuance and the hearing, Mr Bramzell informed creditors of some developments e.g new IVA amendments and he answered creditor questions. He declared at the time of signing the IVA Proposal his FHG Group owned five hotels (down from ten in the original IVA). The remaining hotels were:
The Bridge Hotel & Spa;
The Three Ways House Hotel;
The Wroxton House Hotel;
The Olde Barn Hotel;
The Comfort Inn Sunderland.
He declared that Luqa Ltd had approached the bank lenders at The Bridge Hotel & Spa and The Three Ways House Hotel to take over their positions and that this might result in those hotels being repossessed by the senior lender. That would reduce the portfolio down to three hotels. He had already declared that “he was preparing an action” against the Group 2 parties. Creditors should have recognised that “preparing an action” is not the same as having started an action. Preparations can easily be halted once an IVA Proposal has been approved.
However, it has come to our attention that neither Lee Bramzell nor Purnells advised creditors of an important development which would detrimentally affect the calculations of potential returns to creditors. A winding up petition has been filed against the Comfort Inn Sunderland. That petition, if successful, would result in the loss of this property from the FHG portfolio. FHG could effectively be down to two properties only. The petition has not been filed by a Group 2 creditor and there is no question of this creditor being subject to any “preparing an action” proceedings by FHG because it is clear that the creditor has a valid claim.
The Comfort Inn Sunderland is described in Lee Bramzell’s IVA Proposal as “A former Premier Inn, which was rebranded by Shepherd Cox. Again, significant revenue streams from parking and located next to the new Northern Spire Bridge in Sunderland”. Significant revenue streams which are now under threat. The loss of that hotel would significantly impact on the ability of Lee Bramzell to meet his commitments to creditors. It should have been disclosed.
We have been informed that the petition was served on him on Monday 26th July 2021. Ample time for creditors to have been informed prior to the hearing. That information was not disclosed to creditors and the question is “If creditors had been informed of an insolvency action against this hotel would it have been enough to make 2% of them change their vote and decline to support the IVA”? The IVA was approved on a 79% in favour, 21% against count. An IVA needs 75% approval to be passed. We think it would have had a material effect on the vote because creditors would have seen that the FHG portfolio was falling apart. We do not know whether there have been any actions taken against the remaining hotels, but if this petition was not disclosed then perhaps there are other issues which have been covered up.
So, who suppressed this information ? Clearly Lee Bramzell did. Did anyone else in a position of authority decide not to advise creditors ?
At the beginning of the article we made the statement “Lee Bramzell IVA Approved ……. or is it”? We believe this non-disclosure of an important factor is likely to result in an appeal and the IVA approval being rescinded. That is assuming Purnells does not take action itself to declare the vote invalid. We await developments. It’s never simple and straightforward where Lee Bramzell is concerned.
Lee Bramzell IVA Approved …… or is it ?
To view our previous article please click HERE.