Louis Group Structured Capital Limited (in liquidation) Report by Michael Simpson and

Louis Group Structured
Capital Limited (in
liquidation)
Report by Michael Simpson and
Gordon Wilson
Joint Liquidators
13 June 2013
Louis Group Structured Capital Limited (in liquidation)
Contents
Financial position
Note - 1 Cash at bank
Note - 2 Loans receivable
Note - 3 Loans payable
3
3
3-4
4
Other matters
4
Appendix 1 – Loan Schedule
5
Louis Group Structured Capital Limited (in liquidation)
Financial position
A summary of our current assessment is shown below. We have added further comment where we
consider it necessary.
Per Trial balance
At 29 February 2012
£’000
Investments
Cash at bank
Our current
assessment
£’000
Further
comment
1
441
240
Note 1
13,718
1,250
Note 2
9
9
Total assets
14,169
1,499
Loans payable including
accrued interest
Sundry other liabilities
Total liabilities
31,439
29,589
502
(31,941)
478
(30,067)
Net liabilities
(17,772)
(£28,784)
Loans including accrued
interest (net of provision for
loan impairments)
Sundry other assets
Note 3
Note 1 - Cash at bank
Since our appointment as provisional liquidators the only cash movements have been to pay
liquidator and legal fees as approved by the Court.
Note 2 - Loans receivable
We have included the loan schedule as appendix 1. It can be seen that the majority of the loans
receivable balance represents loans made to LGSPI.
LGSC has formally claimed repayment of £23,599,343, US$2,269,648 and €45,506 from LGSPI being
the net amounts that we determined as inspectors into the affairs of LGSF as having been paid by
LGSC to LGSPI. LGSPI remains unable to repay this debt and we still believe that it is very unlikely to
be able to repay this debt in future.
Regarding the loans recorded as made to companies other than LGSPI, there have not been any
recoveries since our appointment as provisional liquidators on 4 October 2012. Since that time we
have become familiar with the property structures under LGIOM’s control. As discussed in our
property structures update, unfortunately, in the majority of cases we have determined that there is
little value in the structures after any secured creditor lending has been repaid.
The two structure recoveries are likely as below:
LGI Properties Agate Limited
LGSC via an allocated LGSPI loan has provided approximately 50% of the non bank lending to this
company holding 11 apartments in Bonn, Germany with the net property value after bank lending
estimated at €1.34m.
An agreement between LGSC and the other loan providers and the bank is now required to agree a
disposal process to meet the loan repayment request of LGSC.
3
Louis Group Structured Capital Limited (in liquidation)
LG Properties Sage Limited
LGSC is the sole loan provider to this company which holds a plot of land in Germany which was sold
in August 2012 for EUR 780k subject to the receipt of planning permission by the end of 2013. At this
time we do not believe the planning permission has been granted and we are monitoring events.
Security
The security which had been granted to LGSC for its loans to LGSPI includes deeds of guarantee
provided by the Alan Louis Foundation Trust (ALFT) and LGIE. We wrote to the ALFT and claimed
repayment of £23,599,343, US$2,269,648 and €45,506 on 21 November 2012.
On 29 November 2012, we received correspondence from the ALFT’s lawyer to acknowledge receipt of
this letter and to request that we provide copies of the guarantee and agreement referred to in it.
Despite providing copies of the guarantee and agreement and also providing our reports which we
have submitted during our various Louis Group appointments the guarantees have not been
acknowledged nor any payments received. The matter is currently with our South African legal
advisors.
Note 3 - Loans payable
On 8 November 2012, LGSF made a formal demand for the immediate repayment of the full capital
amount of its loan to LGSC plus unpaid interest up to 28 February 2011 totalling £28.8m.
Our current assessment, including interest up to the date of liquidation is that LGSC is owed
£29.589m to LGSF.
LGSC is in no position to satisfy LGSF’s demand and accordingly, LGSC is in default of the terms of its
loan from LGSF.
Other matters
Charge over Mr. Louis' shares in BL Holdings Limited
Our investigations as provisional liquidators indicated that there may have been a charge in LGSC's
favour over 280,000 shares held by Dr. Louis in BL Holdings Limited (“BLH”) to secure the amount of
£1,978,443 owed by LGSPI to LGSC.
We have subsequently made some enquiry into the affairs of BLH and have identified a number of
matters relating to Mr. Louis’ share dealings in BLH, its financial position and its dealings with other
Louis Group companies that we believe merit closer investigation.
However, for the purposes of this report our view is that it is appropriate to ascribe a nil value to this
possible asset.
4
Louis Group Structured Capital Limited (in liquidation)
Appendix 1 - Loan schedule
Name of borrower
Brantwood Corporation Limited*
LG Properties Persian Limited*
Emerald Properties Limited*
LG Enterprises (formerly LG Properties Alpinia
Limited)
LG Properties Eucharis
LG Investments Geranium Limited re Lichen*
LG Properties Angelica Limited*
LG Properties Agate Limited
LG Investments Azalea Limited re Cynara*
LG Properties Ginger Limited
LG Properties Saffron Limited*
LG Investments Azalea Limited re Monarda
LG Properties Sage Limited*
Louis Group Investments Marigold Limited
Silver Arrow Limited*
LG Enterprises Limited (formerly LG Investments
Azalea Limited re Protea)
LG Properties Dianthus Limited
Louis Group Property Investments
Sub total
LG SP Investments Limited (SPI)
Total
Loan
Principal
Interest
Accrued
Total
owing
Impairment
provision
Net value at 29
February 2012
Less cash
receipts 1
March to 5
October 2012
Residual
value at
5 October
2012
Current
assessment
31 May 2013
£000
£000
£000
£000
£000
£000
£000
£000
553
2,854
2,001
50
142
100
-
553
2,996
2,101
50
503
1,033
1,895
-
50
1,962
206
50
442
1,150
490
610
948
736
667
739
728
765
532
127
22
57
24
58
47
36
33
37
36
38
30
-
464
1,207
514
668
995
773
700
776
764
803
562
127
464
1,207
306
189
734
773
355
776
199
803
562
127
208
478
261
345
565
-
28
868
14,288
1
3
664
29
871
14,953
29
216
10,171
655
4,780
16,119
806
17,000
7,833
9,167
30,407
1,545
31,953
18,004
13,947
(1,825)
(50)
(1,875)
(1,875)
50
206
-
0
0
0
0
208
478
261
345
565
-
0
0
0
650
0
0
0
0
600
0
0
0
655
2,768
0
0
1,250
Note 1
0
2,768
1,043
*The Company also holds 50% or more of the issued share capital of these companies, classified as Investments.
Note 1
The loan receivable from SPI is secured via a Deed of Guarantee provided by the Alan Louis Family Trust and security over 65% of the issued share capital of Louis Group
Africa. We have ascribed a value of nil to the Deed of Guarantee and the security over the shares in Louis Group South Africa for the purpose of this report.
5