Was AVRO trading illegally or fraudulently for the last 2+ years? Was it like a Ponzi Scheme?

ihatetrump

Made The Telegraph as well as The Times: (full article is behind a paywall)

https://www.telegraph.co.uk/business/2021/09/24/collapsed-avro-energy-paid-directors-22m-despite-28m-loss/

inspectorperez

ihatetrump said:

Audit absolutely does not appear right - using a 'small' audit firm for such a large turnover probably tells you all you need to know - a £40k fee would be big money for a small audit practice - which then exposes them to undue influence from a no doubt "charming and charismatic" young CEO such as Jake Brown.

No disrespect intended to Laura Hinsley (the audit partner) - her story will be of great interest. 

Hope the PI insurers have been notified of a "circumstance"!

mellyflewus

ihatetrump said:

Made The Telegraph as well as The Times: (full article is behind a paywall)

ihatetrump do you think they read your posts and used your ideas?

or is it a case of great minds think alike?

jimjames

mellyflewus said:

ihatetrump said:

Made The Telegraph as well as The Times: (full article is behind a paywall)

ihatetrump do you think they read your posts and used your ideas?

or is it a case of great minds think alike?

Someone might be feeding them stories

ihatetrump

Certainly not being fed porkie pies 

Looks like someone else picked it up:

https://anotherangryvoice.blogspot.com/2021/09/the-collapse-of-avro-energy-and.html

The more that know about this potential/probable scam the better. AVRO sold their energy at cost (99.93% Cost of Sales) clearly designed to attract customers  (including all the comparison sites & Which?)- and then they pocketed advance payments from unsuspecting customers to build up a cash pool, then fed their other businesses with what appear to be bogus expenses and even had the gall to lend money to their unrelated businesses interest free.

Wait to see if the other tabloids pick up on this.

They played on innocent  customers with the attraction of low rates with the knowledge that credit balances were protected - but who will really pay the price? Everyone else through increased prices.

Interesting that there's a 2 year old post on MSE now closed:

https://forums.moneysavingexpert.com/discussion/6028452/is-avro-energy-a-scam/p2

I guess they now have their answer.

inspectorperez

ihatetrump said:

Certainly not being fed porkie pies 

Looks like someone else picked it up:

https://anotherangryvoice.blogspot.com/2021/09/the-collapse-of-avro-energy-and.html

The more that know about this potential/probable scam the better. AVRO sold their energy at cost (99.93% Cost of Sales) clearly designed to attract customers  (including all the comparison sites & Which?)- and then they pocketed advance payments from unsuspecting customers to build up a cash pool, then fed their other businesses with what appear to be bogus expenses and even had the gall to lend money to their unrelated businesses interest free.

Wait to see if the other tabloids pick up on this.

They played on innocent  customers with the attraction of low rates with the knowledge that credit balances were protected - but who will really pay the price? Everyone else through increased prices.

The way you interpret the interactions would suggest deliberate and planned foul play. Think I would have to agree with that.

OFGEM's passive "react only when it's too late" role makes you wonder what checks they actually do carry out when they issue licenses to characters such as these.

I suspect that like many before them, the directors will escape any serious sanction and the auditors' insurance policy maybe the deepest pocket for any recoveries!

ihatetrump

@inspectorperez - I suspect that you are right but we'll know when the size of black hole is known. I do wonder what the claim limits will be on the auditors insurance policy - they're not a large firm and the claim could well be into 9 figures - even Big 4 firms would struggle with a claim that large.

Don't forget that insolvent trading can bring about personal liability for the Directors -  enough to bankrupt them even if they don't serve time on holiday at Her Majesty's Pleasure.

pearl123

Let's hope something like Newsnight picks it up and plus more newspapers. 

inspectorperez

@ihatetrump - Yes indeed if liquidator/administrator identifies misconduct of continuing to trade whilst knowingly insolvent - always assuming that personal assets haven't been salted away or secretly transferred to others.

I daresay the directors may even have their own personal liability cover, but insurers might deny cover if they have breached the terms of the policy.

Whatever the consequences, it marks another sad day for the energy industry and underlines yet another regulatory failure.

Nebulous2

What is the fee for registering as an energy company? Is it £200k?  I seem to remember an old post saying all you need to start your own utility company is £200k and a laptop.....