HMRC has criticized the behavior of two insolvency practitioners who oversaw an abortive attempt to save the Squibb Group before its demise.
Louise Baxter and Dominik Thiel-Czerwinke, of insolvency specialist Begbies Traynor, had been appointed to implement a proposed company voluntary arrangement (CVA) which would have created a repayment plan for creditors.
However, the plan was ultimately unsuccessful and on Monday (December 4), a High Court judge made a winding-up order against Squibb but refused to appoint the pair as liquidators after HMRC raised concerns about your conduct during the CVA process. Instead, the judge appointed the official receiver to oversee the appointment of the liquidators.
Court documents show HMRC claims Squibb owes it more than £18m after its fraud unit discovered company directors had used company cash for private expenses, including family holidays .
In court papers, HMRC said Squibb’s CVA proposals had wrongly stated that these debts “were contingent debts and indicated they would be valued at £1 for voting purposes”.
He said the CVA candidates had indicated that such treatment by the company appeared reasonable “despite the fact that such treatment was wrong in law”.
The tax body’s court filing said it repeatedly contacted CVA candidates making it clear it believed it was entitled to vote on the basis of the £18m and asking them to confirm the right to HMRC vote.
However, he said the nominees “did not respond substantively.”
Shortly before the meeting of creditors to be held on 21 November, the CVA process was cancelled.
HMRC said in its submission: “The CVA proposals were never viable because HMRC did not support the CVA proposals and had a blocking vote, which had been made very clear to the company and the CVA candidates”.
He added: “This whole episode was a waste of time and money, which the CVA candidates would have appreciated if they had properly assessed HMRC’s debt for the vote and sought HMRC’s views on the proposed CVA”.
Construction news approached Begbies Traynor for a response to HMRC’s claims, but a spokesman said neither the company nor individual employees were ready to comment.
