Allegations have emerged that the now-defunct lease broker,
Smartfundit.com, and its parent Corporate Computer Lease were
involved in financial mismanagement prior to their collapse into
administration in June.
The two businesses also owe considerable sums to a host of
companies, including lessors, as well as HM Revenue & Customs
for unpaid taxes, recently published notes by administrators have
revealed.
The revelations, which also include allegations that Justin Floyd,
one of Smartfundit.com’s founders, owes hundreds of thousands of
pounds to the company, are particularly shocking as the broker had
positioned itself as a market leader in its field with a bright
future.
“Misled”
BayTech, the venture capital firm that last December invested £3.3
million (€3.7 million) into Smartfundit.com’s also defunct parent,
Corporate Computer Lease (CCL), claims to have been “misled” by
Justin Floyd and Suki Gallagher, another former Smartfundit
director, over some of the “financial irregularities” at the two
companies.
In particular, BayTech said that it was concerned over how
Smartfundit.com and CCL used funds transiting between the finance
companies and the equipment suppliers.
Since May this year, investigations by Vantis have uncovered that
over £750,000 worth of funds provided by finance companies had been
absorbed into the company’s balance sheet, pending onward payment
to vendors.
“There is certainly evidence that these funds were not placed in
separate trust accounts pending the deals being finalised, and that
these funds were used by CCL and Smartfundit as internal working
capital,” said Peter Wastell of Vantis Business Recovery Services,
who is acting as joint administrator for the two companies
alongside Vantis’ Michael Young.
Separately, Justin Floyd – who, in e-mails, had given himself the
title of “founder and visionary” of Smartfundit.com – personally
benefited from a £289,545 director’s loan at CCL, which he now owes
to the company’s creditors.
“A demand for the immediate repayment of this loan has been made
and is due to [be] put in the hands of solicitors shortly,” Wastell
said.
Company debts
A breakdown of the creditors shows that CCL owes over £1 million to
a wide range of companies including major lessors and vendors such
as Bank of Scotland Equipment Finance, CIT Vendor Finance, Dell
Computer Corporation, Grenke Leasing, ING Lease UK, Sage UK,
Salesforce.com EMEA, Siemens Financial Services, Universal Leasing,
and Zetes Ireland.
CCL also owes HM Revenue & Customs nearly £400,000 in arrears
for corporation tax, VAT and PAYE.
Separately, Smartfundit.com owes over £3.3 million to creditors
such as Axicom, Dell Corporation, Infor, Investec Asset Finance,
Leasing World, Regus, Version One, and VSC Mobile Solutions;
although £2.9 million of the total amount is an inter-company debt
owed back to CCL.
Administration and secondary income
Once it had been placed into administration in June, CLL attracted
44 expressions of interest but the administrators only received one
formal offer, which they did not deem of an acceptable level.
CCL could still generate secondary income, estimated to be around
£1.35 million, however, from running its book off over the next
three years.
Vantis’ Wastell reported receiving two offers for assisting in the
collection of this secondary income, one of which was from Longwood
Capital, a company in which Adrian Leach – CCL’s acting chief
executive – is a director; and the other from Vantis Corporate
Asset Finance (VCAF).
Leach’s company offered to collect the secondary income in return
for a 25 percent commission of all sums collected, but because VCAF
only asked for a 15 percent commission – which could result in a
potential saving of £135,000 for the creditors – the administrators
will put VCAF forward at the High Court.
An in-depth analysis of the Smartfundit.com affair will appear
in the next issue of Leasing Life (October issue).
Jason T Hesse
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