London Capital & Finance High Court Judgement about GST

The full High Court judgement for the case brought be Global Security trustees to reverse the administrators decision about formation of the Creditors Committee is available at the link below

http://www.bailii.org/ew/cases/EWHC/Ch/2019/3339.html

A really important part of the summary explains the sums of money paid to the 4 individuals connected to LCF that total nearly £20 million. These are in section 7.
  1. The concerns raised by the Administrators in their report about transfers made to connected individuals are illustrated by the table below. Nearly £20 million of bondholders' money was transferred either directly or indirectly to the four individuals concerned.

  2. Transfers out
    Mr Barker /FONT>Mr Hume-
    Kendall
    Mr GoldingMr Thomson/FONT>ChargesTotal out
    Date££££££
    22/06/2018411,675.002,332,825.002,332,825.00411,675.0011,000.005,500,000.00
    03/07/2018150,448.50709,827.50709,827.50351,296.003,850.501,925,250.00
    23/07/2018374,250.002,120,750.00-374,250.005,750.002,875,000.00
    23/07/2018------
    07/08/2018--2,120,750.00-9,250.002,130,000.00
    08/08/2018187,125.001,060,375.001,060,375.00187,125.00-2,495,000.00
    17/08/2018261,975.001,484,525.001,484,525.00261,975.007,000.003,500,000.00
    27/11/2018112,309.93---225.07112,535.00
    27/11/2018--636,225.00-1,275.00637,500.00
    27/11/2018-636,225.00--1,275.00637,500.00
    27/11/2018---112,275.00225.00112,500.00
    1,497,783.438,344,527.508,344,527.501,698,596.0039,850.5719,925,285.00
Another really important point is raised in section 9 about the role of GST and the debenture being enforceable.

LCF executed a debenture on 29 December 2015 in favour of GST. There were some immediate doubts about its enforceability and a further debenture was executed the following day in slightly revised terms. Nothing turns for present purposes on the differences between the two deeds. It is acknowledged by the Administrators that a valid debenture is in place. The following summary of the terms of the Debenture is taken from the 29 December 2015 version.

It also goes on to say

The relationship between the Debenture and the Security Trust Deed is not entirely comfortable.

A further comment regarding the role of Global Security Trustees is:

"He was right to say that GST suffered from irreconcilable conflicts of interest.  GST had, and has, no business other than acting as Security Trustee for LCF and its ability to perform its role is entirely dependent upon the qualities of its directors and shareholders. There is no evidence to suggest that GST has any resources. Indeed, there is no clear evidence about how it is funding this litigation"

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