Genesis Capital enters liquidation
despite signs of market recovery
Lessors continue to be hit by
insolvencies, despite latest figures showing a general easing in
bad debt. The latest collapse to have affected lessors has been the
administration of Liverpool-based law firm Lees Lloyd Whitley
(LLW).
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It is understood LLW’s creditors are expected
to lose £10 million (€11.09 million), much higher than previously
assumed, £1.6 million of which is owed to leasing companies.
Creditors have claimed £11.8 million, with all but £71,207 due to
unsecured creditors. The firm also owes some £3.3 million to
landlords Riverside Park, and £2 million to its bank, Allied Irish
Bank.
Administrators expect to generate £500,000
through realisation of LLW’s assets – a shortfall of £10.2
million.
Unlikely to raise enough
Sales of the firm’s assets is unlikely to
raise enough money to pay off even a small proportion of the debts
owed to the leasing companies. According to asset valuation firm,
Robson & Kay, the combined value of LLW’s financed assets is
“worth significantly less” than the amounts outstanding on
agreements.
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By GlobalDataFollowing a creditor’s meeting on November 18,
it is understood from joint administrators Jonathan Booth and
Robert Rutherford, of insolvency practitioners Parkin S Booth &
Co, that the firm’s assets “will realise sufficient for there to be
a distribution to the unsecured creditors”, which includes
lessors.
The 190-year-old law firm employed more than
70 staff.
Providing legal services to companies and
individuals in England’s Northwest, LLW’s largest client was the
Prison Officers’ Association, for which it provided representation
in personal injury cases against the Home Office, among other
services.
Apart from the POA contract, it had more than
1,200 live personal injury files, and undertook a significant
amount of insolvency work. Before going into administration, cases
were transferred to other practices.
Chief among the lessor creditors of LLW is
CIT, which is owed £570,000 following LLW’s collapse on September
18.
But the American lessor has issues with
creditors of its own as it filed for Chapter 11 protection at the
beginning of November after a proposed $31 billion (€21 billion)
debt exchanged with bondholders failed to gain adequate
support.
Even though CIT’s leasing business was not one
of the units included in the group’s bankruptcy filing, it joins
its parent in being protected from the collection of debts until
the company exits bankruptcy, or 31 January 2010, whichever comes
first.
However, following the lender’s bankruptcy,
Fifth Third Leasing, Siemens Financial Services, Wells Fargo
Equipment Finance and M&T Credit Services, all of which are
creditors of CIT, objected to the protection of CIT’s leasing
arm.
In response to these objections, Judge Allan
Gropper in recent weeks ruled that CIT and these creditors should
“negotiate and cooperate in good faith and use reasonable means to
resolve any dispute related to calculation of the required
payments”.
But CIT is not the only lender facing the
liquidators.
Last month, UK specialist IT broker, Genesis
Capital, entered liquidation. At a meeting on November 11 in
London, Genesis Capital’s statement of affairs were disclosed and
insolvency specialist Wilson Field was appointed as liquidator. It
is understood Genesis Capital Limited transferred its asset finance
broking business to another entity, Genesis Capital (Finance &
Leasing) Limited, last summer.
“[The liquidation] is being instigated by me
as a final solution to a 15-month dispute we have had with the
landlord of our main office, Zurich Assurance,” said Matthew
Porton, managing director of the company.
Porton said, as part of the process, all of
Genesis Capital’s trading agreements with funders, vendors and
clients, as well as its leases (both as lessor and lessee) and
loans (as borrower and lender), were novated, “to ensure complete
continuity for all of our stakeholders who were made aware of the
problems we were having, and why the transfer was taking
place”.
Taken on all liabilities
The terms of these agreements were not
modified in any way, Porton said, and the new entity has taken on
all liabilities to funders, clients and vendors that Genesis
Capital Limited previously had.
“No trade creditors, funders or clients will
lose any money from the arrangement,” he added.
Genesis’ liquidation, CIT’s bankruptcy and
LLW’s collapse represent examples of a market still under severe
pressure. However, the bigger picture shows that things are
improving. In the third quarter, compulsory liquidations and
creditors’ voluntary liquidations for England and Wales were down 5
percent from the previous quarter.
Also, latest FLA statistics, which date back
to the month of September, show the business finance market,
excluding big ticket, was up 43 percent on the previous month.
Significant figures – amount owed by
LLW
|
Creditor |
Amount Owed (£000s) |
|
CIT |
570.3 |
|
HFGL (BNP Paribas) |
175.5 |
|
Investec Asset Finance |
127.4 |
|
GE capital solutions |
115.8 |
|
Fortis Lease UK |
113.0 |
|
Close Business finance t/a |
103.6 |
|
Universal Leasing |
94.3 |
|
Hitachi Capital UK |
68.2 |
|
Leasedirect finance |
61.6 |
|
Close asset finance |
56.0 |
|
ECF asset finance |
53.3 |
|
ING Lease UK |
47.1 |
|
Kingsway Finance |
36.2 |
|
Total |
1,621.5 |
|
Source: Leasing Life |
|
Fred Crawley
