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Sun 7th Jul 2013 - Breaking News - Creditors lose £2.25m in 52-site collapse
Creditors to lose £2.25m from 52-strong pubco collapse; administrator investigates ‘relevance’ of hedging product: Unsecured creditors are set to lose £2,250,000 from the collapse of HK Taverns in the wake of the death of its controlling party Harry Kelly in February this year – the company ran an estate of 52 pubs in the East Midlands. The pubs ranged from wet-led community pubs to large rural food-led pubs, with the majority of the pubs leased from major pub companies with five being personally owned by Harry Kelly. Administrator Baker Tilly reports that the company grew rapidly in a relatively short period of time. It noted: “However, due to an absence of investment, the administrative functions and management structure were insufficient for a business of its size. Furthermore, there appears to have been an absence of formality in the company’s management and administration, with weak systems and controls in place. Helen Kelly is the sole director and shareholder of the company, although Harry Kelly controlled the action of the company, seemingly acting as a shadow director. Following Mr Kelly’s death, there was a loss of direction at the company. In the absence of systems or controls or a succession plan, the company became increasingly dysfunctional. This is evidenced by the substantial HMRC arrears and non-payment of suppliers. PAYE and VAT arrears were estimated at circa £500,000, utility arrears were £250,000 and total unsecured claims were £2,250,000.” The company has only filed one set of accounts since it started trading and had handed back the majority of its pubs prior to administration – 15 to Enterprise Inns and 13 to Punch Taverns. A further 11 pubs have been handed back to Enterprise Inns at or post appointment of administrators. Lloyds TSB Bank has a charge on the five freeholds owned by Harry Kelly personally and the bank has underwritten £100,000 of trading losses to allow the pubs to remain open and sold – and to preserve their going concern value. Colliers International is marketing the five pubs – The Red Lion, Rothwell, The Admiral Hornblower, Oakham, The Wishing Well, Dyke, The Beehive Inn, Grantham and The Magnet Tavern, Boston – with sales expected to complete in September or October this year; no funds are expected to be available for unsecured creditors although there is “substantial interest” in the portfolio. Baker Tilly also reports it is ‘currently investigating’ whether the company was sold a ‘relevant’ interest rate hedging product and ‘whether there is an entitlement to redress’.

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