Shepherd Cox Hotels Legal Action
Shepherd Cox has filed a defence to the legal action brought by ten Safe Or Scam investors. The legal action covers six Shepherd Cox hotels. Those hotels are:
1. The Travelodge Hotel in Sedgefield;
2. The Best Western Grand Hotel in Hartlepool;
3. The Sandpiper Hotel in Chesterfield;
4. The Comfort Inn in Manchester North;
5. The Jersey Arms in Bicester; and
6. The George Hotel in Piercebridge.
The allegations centre around the mis-selling of hotel rooms in contravention of FSMA regulations and the non-payment of guaranteed rentals. There is an interesting article in Hotel Analyst in mid 2017 here.
The allegation related to non-payment of guaranteed rentals is one which is very familiar to anyone who has invested in hotel or care home rooms. It pretty much applies to every hotel or care room investment. Carlauren Group investors and Signature Living investors will agree. The corona virus outbreak cannot be blamed for rental or interest arrears in any “guaranteed” scheme because the problems invariably started long before CV-19 appeared. In the case of Shepherd Cox, guaranteed rentals weren’t being paid as far back as 2017.
Lee Bramzell, the Shepherd Cox director responsible for dealing with the claim, has responded to the insolvency allegations by stating that one of the hotels has been making a profit (up until the CV-19 pandemic which naturally affects every hotel in the UK). He has declared that four hotels have been running at a loss, but he claims they are solvent because their ongoing debts are covered by “Shepherd Cox group companies”. It is unclear how those group companies are able to support the hotels bearing in mind his statement that ALL Shepherd Cox hotels are closed. He has not explained how the group companies can sustain their support if they have no income.
Mr Bramzell has now advised the court that one hotel is insolvent. It is not surprising as it is the oldest hotel most in need of refurbishment. A recent Trip Advisor comment stated that the third floor stairs were out of action due to a leaking roof. The investors’ allegation is that Shepherd Cox does not have enough money to operate the hotels let alone have any spare cash with which to refurbish them. We will not comment on the situation concerning the five hotels which Mr Bramzell claims are solvent because the court will hear the evidence from both sides. We anticipate more hotels being brought to the court’s attention. We are aware of disputes at several more Shepherd Cox hotels which are currently not included in this legal action. Those disputes go back several years.
We have also recently been made aware of a bankruptcy petition filed against Mr Bramzell. A SOS client has been added as a supporter of that petition. We believe another director, Nick Carlile, has been served two Statutory Demands for payment of debts but has not yet been served with a bankruptcy petition.
Safe Or Scam has laid out the position of its investor group in relation to this situation. If our group cannot be repaid in full we expect it to be provided with sufficient security to cover the investment capital + rental arrears + costs. The Shepherd Cox directors have to date refused (or are unable) to provide the required security.
We have noted the position of charge holders such as Luqa Ltd which appears to have supported Shepherd Cox companies over a long period of time in what it is alleged are unlawful schemes. The interest rates payable on loans from the non-mainstream lenders are very high. The solicitor representing Luqa Ltd, a company domiciled in Malta whose director is Elliott Shaun Webster who lives in the UK, has thus far been unresponsive.
This is a case with perhaps a few more twists and turns before the hearing, but we remain convinced the investors’ case is very strong and has not been properly addressed in the defence submitted by the companies.
To view our previous article on Shepherd Cox please click here.
To view a recently updated article with the result of the court hearing please click here.