MBI and Northern Powerhouse Developments

NeverEnding

Hi, I am related to a Couple of Overseas investors who back in 2014 invested in the Walsden Care Home, in 2018 the promised annual returns stopped being received and after excuses after excuses they are now at the same stage as everyone else that is tied up in this mess. The most recent update is the CVA offer, if rejected Walsden will probably end up in the same pile of companies in administration. They really don't know if its best just to accept the pittance that is being proposed or let the company fall into admistration... I have spoken to some other investors who are in this project and highlighted in the document had they wasn't even aware of the CVA proposal!! anyone else still in Walsden with this offer.. would be great to share thoughts..

npd_investor

Thanks for all your advice and speculations. I am not a lawyer either which is why I have passed the case to our house lawyer. Things are slowly becoming clearer wrt to the lease and subleases that are in place. The latter is indeed void following the insolvency of NPD. The former is registered with the land registry and will remain valid. There are a few scenarios arising on the horizon re. the way forward and I think this will be made public coming Wednesday during the D&P investor evening.

Fortunately I am more familiar with the running of a hotel than with the legal side of things which is why I have called upon external legal advice. However it is clear that no hotel can survive on ancillary activities only and the objective will be to have all investors back one of the scenarios that will be discussed coming Wednesday.

AnotherJoe

Good Luck npd_investor. Have you been given guidance on whether the hotel can use your room irrespective your wishes?

npd_investor

Thanks AnotherJoe,

Interesting investor evening organised by D&P last Wednesday. Although a lot has become clear the way forward is still to be worked out. Roughly there are 2 scenarios:

1. Hotels are being put on the market with vacant possession which would require a judge to void the legal title (125 year leases on the individual rooms) based on the fact that the whole scheme was a fraud. This was the scenario proposed by Mr. Duff and would raise roughly £20M for all the hotels that are currently owned by NPD.

2. Hotels will continue to be managed by hotel management company as they currently are and investors will be paid annual returns (out of the operating profit of the hotels). They would run the hotels for the foreseeable future (up to 5 years) until the market is ready to sell and a serious buyer could be found. This scenario had backing from several investors on the floor including myself.

Presentation also made it clear that Metis Law is in hot water and can expect claims since they are deemed complicit to this fraudulent scheme.

The full report with all the details still has to be published

grnglide

What makes them think that there will be any profits to pay the investors with?
Who covers any losses?

AnotherJoe

I cant blame you for wanting to hang on to the pipe dream of your initial profitable investment but i think all that will inevitably happen is that after a while, when its apparent that the hotels cannot take the load of paying out administrators, a management company and investors, you'll up back at scenario 1 when theres just not enough money to go round.
Also, option 1 selling the hotels, raises money and hopefully gets creditors something as opposed to a tiny dribble from whatever can be squeezed after paying all the running costs of a hotel. And with Option 2, what if the situation is worse in 5 years with the hotels more run down (how much will be spent on maintenance on them do you think?? WHere woudl that money come from? ) rather than the hope its better after postponing the inevitable.

I'd be going after Metis Law for the gap between what you get back and what you paid, in the hope that either the company or its insurance would have the money to pay out.
Do you even get to vote on options 1 or 2 anyway? Isnt it up to the adminsitrators to decide what is the best way of raising the most money.

Reaper

npd_investor wrote: »

1. Hotels are being put on the market with vacant possession which would require a judge to void the legal title (125 year leases on the individual rooms) based on the fact that the whole scheme was a fraud. This was the scenario proposed by Mr. Duff and would raise roughly £20M for all the hotels that are currently owned by NPD.

2. Hotels will continue to be managed by hotel management company as they currently are and investors will be paid annual returns (out of the operating profit of the hotels). They would run the hotels for the foreseeable future (up to 5 years) until the market is ready to sell and a serious buyer could be found. This scenario had backing from several investors on the floor including myself.

I agree option 2 sounds unlikely to me. It only works if the original business model is sound, which I don't think it is. Also without all the individual leases being declared void (as per option 1) how will they be able to sell it in 5 years time?

Aretnap

Also the selling price of the hotels should reflect their revenue potential, so if £20M seems disappointingly low it is likely that a good part of the reason is that the location and/or design of the buildings limits their profitability and therefore their appeal to buyers. If that's the case now, it will also be the case in 5 years time. And while it's obviously best to avoid a firesale so taking a certain amount of time to sell the hotels is probably a good idea, 5 years send like a long time to spend looking for a buyer. So is the assumption that the hotels will fetch a better price in 5 years time, and turn a reasonable profit in the meantime, based on anything more than wishful thinking?

npd_investor

They were indeed going to have the investors vote for option 1 or 2 and it may well be that even with option 2 the hotels will be sold sooner rather than later if it turns out not to be making any profit. Note that also with option 2 the lease holders will need to give up their legal title when the time comes to sell the hotels since they will be marketed with vacant possession.

We were told that the total monies raised by NPD from investors was roughly £75M of which £22M was used to purchase the hotels. We did get some overview of where the remaining £53M went. I cannot remember all the details but £8.7M was paid for renovation (although allegedly GW also used that to remodel his primary residence). Then £6M was paid out to selling agents (Select Resorts, etc.). £2.7M for NPD staff costs. £4.2M investor returns. Then a whole raft of smaller expenses but still leaving £13M to be unaccounted for. We were told that GW also funnelled some funds to buy BTL property from which he privately pocketed the proceeds. Allegedly he owns property on the Bahamas, Cyprus and other far flung places. Although the freezing order applies to his worldwide assets it may be a lengthy job figuring out where in the world he has real estate. He has apparently been seen handling large amounts of cash in the final days of NPD and whereabouts of that money is not known.

All in all the administrators were hopeful that they could raise more than the 20/75 ratio but whatever option it is going to be some time before it is all dealt with. Our lawyer has already filled a claim with Metis Law for being complicit with this fraud.

npd_investor

The 5 year period for option 2 was just mentioned as a rough timeline. It could be longer but it could be shorter. Main objective is not to do a firesale and better to sell operating hotels where potential buyers can check the figures.