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Mon 24th Jun 2013 - Breaking News - Scotch Steak Houses actions under investigation
Scotch Steak Houses owner actions under investigation: The administrator of Scotch Steak Houses has raised concerns over the actions of its owner Ali Salih prior to the company being placed in administration in April this year. Scotch Steak Houses, founded in 2003, made an accumulated profit of £993,764 up to June 2009 at an estate of seven prime leasehold sites in London. However, the company lost a combined £287,000 on total turnover of £6,910,000 in 2010 and 2011. Administrator Wilson Field reports that Salih decided to sell leases to realise premiums to reinvest in the rest of the estate. The company sold sites in Charing Cross Road, London Street and Piccadilly. The company began a major investment in its Strand site to turn it into a high-end burger restaurant but missed its quarter rent, leading to the forfeiture of the lease. The site in Shaftesbury Avenue was sold to a new company, New Scotch Steak Houses (NSS), whose sole director is the same, Ali Salih, for a premium of £150,000 plus rent arrears of £157,400. A deal was agreed on the same day by NSS to sell the property to Befran Properties for £550,000 plus rent arrears of £157,400. The administrator reported: “The deal agreed between NSS and Befran included a caveat that it was the responsibility of Befran to ensure consent to transfer from the landlord within three months of the date of the sale. It is understanding that no consent was achieved and the interest has reverted to NSS. It would appear that NSS was set up as a vehicle to enable this transaction. It would also appear on the surface that excess sales received by NSS should be payable to the company and/or the transaction was entered into at less than fair market value. Our solicitors and chartered surveyors have been advised of the nature of this transaction and our investigation this into matter is ongoing.” Then, the administrator reported, a further transaction was entered into in relation to the Shaftesbury Avenue property. Scotch Steak House agreed a surrender with its landlord Barandene for £500,000, subject to a deduction for March’s rent plus landlord costs of £6,795. The administrator reports: “Following the surrender it appears that only £150,000 was payable to Scotch Steak Houses and £350,000 was allocated to New Scotch Steak Houses. However, the agreement does not make any reference to the sum of £350,000 being payable to a third party nor has any further documentation been provided to evidence why the funds were treated in this way.” Of the £150,000 received by Scotch Steak Houses, £50,000 was deposited into a court account to discharge a freezing order on the company’s Strand property. The administrator adds: “This matter is being investigated.” On 16 April, six days before the administrators were appointed, Scotch Steak House also agreed to sell its Queensway site interest to New Scotch Steak Houses for £10,000.The administrator notes: “Prior to these transactions taking place the director had been advised that any such transaction would be investigated to ensure that there was no loss caused to the creditors of the company.” The administrator also notes that a number of Scotch Steak Houses employees had transferred to New Scotch Steak Houses. Unsecured creditors of Scotch Steak House are owed £1,190,517 – a total of £136,434 is expected to be realised by the administrator.

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