Louis Leonard Gerber and Matthew Wright, from court-appointed liquidators Leonard Curtis, are winding up the affairs of Hurel Ltd, the company which RG Falla became shortly before it was placed into liquidation in March 2023.
They have taken their case to the Royal Court, claiming that the defendants failed in one or more of their duties to the company, which would have included acting in good faith in a way they believed was in the company’s best interests; considering the interests of the company’s creditors and balancing them against the shareholders should they conflict; to act with reasonable care, skill and diligence; and to exercise independent judgment.
The nine defendants are Paul Mason, Michael Wagstaff, Dean Winsall, Julian Winser, Richard Lee, Ian Carre, Sarah-Jayne Brewin, Mark Palfrey and Stuart Falla. Some of them are now working for other local construction firms since the collapse of Garenne Group.
Mr Falla is alleged to have acted as a ‘shadow director’ of the company between 2016 and 6 April 2023.
The liquidators said that he regularly sent emails using a Garenne Group email address and using a Garenne Group email signature.
If the claims fail, returns to unsecured creditors are expected to be negligible, the liquidators have warned.
Among the specific allegations the liquidators claim that from the date the defendants took on their directorships they committed several breaches of duty, including allowing the company to continue trading at a loss, and failing to have sufficient or reasonable regard to ongoing liabilities and the company’s bad debts.
It is also alleged that the defendants either entered into loan facility agreements provided by NatWest, including one with a limit of £9m., or allowed the company to enter into these, without consideration of its best interests and without exercising sufficient oversight over them.
At a time when the company had no prospect of avoiding liquidation due to insolvency, the directors also failed to take any steps to minimise any loss to its creditors, which they should have done, allege the liquidators.
The defendants were represented by four advocates when the court papers were formally lodged in the Ordinary Division of the Royal Court.
All four said their clients would be filing defences, which they now have four weeks to do.
Background
Jersey-based building contractor Camerons was the first of the Garenne Group companies to collapse in March 2023, and it was not long before other group companies followed.
RG Falla, which had changed its name to Hurel, entered voluntary liquidation a month after Camerons, with creditor claims of more than £30m.
Another court action being brought by private company Lavinia Holdings Ltd against RG Falla claims that even in the lead-up to this, the company was being presented as ‘liquid’ in that it continued with a £10m. development project on a Fort George Property.
Figures quoted in the liquidators’ papers set out the management accounts of RG Falla show that between July 2021 and 30 June 2022, the company made losses amounting to about £1.1m. Although these accounts had not been audited, they were in an advanced state, said the liquidators.
