EXHIBIT 99 (a)
119
Smithsons 79 Mosley Street
- - ---------------------------- Manchester
S O L I C I T O R S M2 3LT
Telephone: 0161 237 9283
Our Ref: AGS/AS/C31-1/cgi1 Facsimile: 0161 237 9284
Your Ref: DX: 18574 Manchester 7
7 March 1997
J J Fyfe Esq
Corniche Group Incorporated
Wayne Interchange Plaza I
3rd Floor
145 Route 46 West
WAYNE, NJ 07470, USA
Dear Sir
Corniche Distribution Limited (In Administrative Receivership)
The Stationery Company Limited (In Administrative Receivership)
We have been asked to give a legal opinion as to the status of the above
subsidiary companies of Corniche Group Incorporated ("CGI") as a result of
receivership proceedings. This opinion is based upon the information and copy
documents supplied by CGI and the other sources referred to in this opinion.
1 Background
Corniche Distribution Limited (In Administrative Receivership) ("CDL"") and
The Stationery Company Limited (In Administrative Receivership) ("TSCL")
borrowed considerable sums of money from The Bank of Scotland. It is the
normal practice in England for banks, when advancing sums of money to limited
companies, to obtain security for those borrowings by means of mortgages over
fixed assets ("Fixed Charges') and debentures over pools of assets which by
their nature will change from time to time ("Floating Charges"). This
security is taken in one document known as a Fixed and Floating Charge. CDL
executed a Fixed and Floating Charge in favour of The Bank of Scotland dated 7
April 1995 and TSCL similarly executed such a document in favour of The Bank
of Scotland dated 16 November 1993.
A copy of the charge executed by TSCL has been supplied by CGI and is annexed
to this opinion. We are informed by officers of CGI that the charges executed
by CDL and Chessbourne International Limited ("CIL") are in substantially the
same form. We refer to paragraph 3.1 of the charge and are of the opinion
that all the assets set out in the Summaries referred to below are caught by
the security created by those charges.
We have considered the copy document supplied to us and on the basis that all
charges are in the form annexed, we are of the opinion that all the assets of
CDL and TSCL are the subject of security in favour of The Bank of Scotland as
a result of such charges.
A G Smithson R K Wilson (Notary Public)
REGULATED BY THE LAW SOCIETY IN THE CONDUCT OF INVESTMENT BUSINESS
also at 6 Raymond Buildings, Gray's Inn, London WC1R 5DA.
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We have been supplied with copy Summaries of Assets and Liabilities at the
date of the appointment of the relevant administrative receiver of CDL, TSCL
and CIL by CGI and it can be seen that the liabilities secured by the charge
in favour of the Bank far outweigh the value of the assets in each of the two
companies. In the case of CDL the estimated deficiency was £4,276,456,
in the case of TSCL the estimated deficiency was £4,041,333 and in the
case of CIL the estimated deficiency was £5,137,617. The administrative
receivers referred to in paragraph 2 below prepared statutory reports on the
companies. Copies of these reports are annexed to this opinion together with
a copy of the report on CIL which is referred to in paragraph 10 below. These
reports, while disagreeing with certain of the figures on the Summaries,
conclude that there will be deficiencies in the receiverships. We have also
been supplied with this information in the case of CIL and it is reported by
the administrative receivers (who are common to all three companies) that
there is a deficiency of assets over liabilities in CIL.
2. Administrative Receivership
The two Fixed and Floating Charges executed by CDL and TSCL in favour of The
Bank of Scotland plc ("the Charges") contain powers for the bank to appoint an
administrative receiver of the assets covered by the security.
The appointment of an administrative receiver was effected on 7 February 1996
in the case of TSCL and 28 February 1996 in the case of CDL.
The role of administrative receivers is to collect and realize the assets of
the security to the extent necessary to repay the chargeholder (i.e. Bank of
Scotland). Given that the liabilities exceed the assets, all the assets of
CDL and TSCL are to be realized by the administrative receivers under the
charge and the net proceeds of disposal are to be paid to the bank as payment
against the liabilities owed to the bank by CDL and TSCL.
3 Effect of Receivership on the Officers of the Company
The officers of companies in England and Wales comprise the company secretary
(whose function is purely administrative) and the directors who are the
officers charged with the day to day management of the company. The powers of
the directors are set out in the Company's memorandum and articles of
association, and in the case of CDL and TSCL, the Companies Act 1985.
Statute is silent as to the effect of administrative receivership on the
powers of the directors of companies placed in administrative receivership but
the matter fell to be decided by the English Courts on a number of occasions
and the most recent case, Gomba Holdings UK Limited -v- Homa in 1986, held
that the appointment of a receiver suspends the powers of a company and its
directors to deal with the assets which are the subject of the charge. The
effect of the suspension of the powers of CDL, TSCL and their respective
directors, were complete since all the assets of the two companies were caught
by the Charges.
The powers of administrative receivers are contained partly in the Charges and
are also contained in statute, namely the Insolvency Act 1986, s.42 (1) and
Schedule 1. The powers contained in the Charges and Schedule I Insolvency Act
1986 are far reaching and replace in all material respects the powers formerly
enjoyed by CDL, TSCL and their directors for the duration of the receivership.
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4 Effect of Receivership on CGI
CGI is the holder of the entire issued share capital of CDL and through CDL it
is the holder of the entire issued share capital of TSCL. Such a relationship
does not create any obligations on the part of CGI in respect of the
liabilities secured by the Charges save insofar as any guarantee of the
obligations of CDL and TSCL were given by CGI to the bank. We are informed by
the officers of CGI that no such guarantees have been given to the bank by CGI
and consequently we confirm that no liability can attach to CGI by virtue of
the charges.
We have been supplied with a copy of a mutual release which the officers of
CGI inform us has been executed by The Bank of Scotland and CGI. A copy of
this mutual release, in the form signed by CGI, is attached to this opinion
and clause 2 of that document releases CGI from any liabilities to The Bank of
Scotland.
Similarly, the appointment of administrative receivers in respect of the
assets of CDL and TSCL have no effect on the assets of CGI. We acted for CGI
in connection with claims made against CGI by the receivers of CDL in
connection with sums allegedly owed by CGI to CDL on the intercompany
accounts. All such liabilities were compromised between CGI and CDL. We
attach a copy of the compromise agreement and are of the opinion that the
agreement is enforceable on its terms and has the effect of releasing CGI from
all liability to CDL on performance by CGI of its obligations under that
agreement. It is open to a subsequently appointed liquidator to question
transactions carried out by a receiver. The only basis upon which the
compromise agreement could be attacked would be that it was a transaction at
an under value. The valuation letter from Baker Tilley makes any such attack
most unlikely. Even if such an attack were launched we are of the opinion
that it would be unsuccessful.
5. Statutory Obligations of the Companies
The status and nature of the company does not change in law upon the
appointment of an administrative receiver, and consequently strictly speaking
the company remains liable to file annual returns and statutory accounts. In
practice this is not done and the Registrar of Companies (the government
official in England and Wales responsible for overseeing companies) will not
enforce such an obligation. It would be normal for directors to resign
shortly after receivership although their obligation to assist with the
process continues. A receiver would have no responsibility for compliance
with the regulatory requirements and consequently in practice there is no one
against whom the Registrar could proceed for a breach of the company's filing
requirements. Even if the directors remained in office the Registrar, as a
matter of practice, does not require the filing of annual returns or statutory
accounts since to take enforcement proceedings in that regard might adversely
affect the receivership. The Registrar takes the view that such proceedings
would be inappropriate.
This is a matter of practice and there is nothing in statute which relieves
the company from these filing obligations. We have, in providing this
opinion, spoken with the appropriate regulatory authorities at Companies House
who have confirmed this practice to us over the telephone.
The obligation to file accounts on a company is one on the officers of the
company and there is no responsibility on the part of CGI, as holding company,
to ensure that returns and accounts are filed with Companies House by either
CDL or TSCL.
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It follows therefore that the preparation of financial statements is
impractical since the receivers have control of the books and papers of the
companies. Preparation of such financial statements will also be costly and
in practice no auditor could be found to prepare the financial statements.
6 Length of Receivership
There is no minimum or maximum time specified for a receivership and as a
result some receiverships can go on for a number of years. The receivership
will end when the receivers have disposed of all the assets under the Charges
and applied the proceeds of such disposals.
7 Position post-receivership
Once the receivership of CDL and TSCL is at an end the companies will have no
assets remaining. CDL and TSCL will therefore be placed into liquidation
after the conclusion of the receivership. The liquidation will be a
liquidation by order of the Court, known as a compulsory winding up, and the
powers of the directors of CDL and TSCL cease upon the Court making a
compulsory winding up order. Upon liquidation there will be restrictions
under Companies Act 1985 which will prevent CGI from dealing with or disposing
of the shares in CDL and TSCL without consent of either the liquidator or the
Court as appropriate. After liquidation, CDL and TSCL will be dissolved
automatically by virtue of the Insolvency Act 1986 s.205 at the end of the
period of three months beginning with the day of registration of a notice of
the final meeting of creditors and vacation of office by the liquidator.
Dissolution of a company results in the company ceasing to exist as a legal
entity.
8 Trading post-receivership
We have specifically been asked to advise whether or not the business of CDL
and TSCL ran continue during the receivership. The business may be continued
by the administrative receiver within a specific power so to do contained in
the Insolvency Act 1986 Schedule 1 paragraph 14. The power of the directors
of CDL and TSCL, having been suspended by virtue of the receivership, prevents
them from continuing to trade CDL or TSCL.
The summaries of the assets and liabilities of CDL and TSCL demonstrate that
the liabilities of both companies exceed the assets. As a result, the
receivership is insolvent. CDL was a holding company and never traded. TSCL
was a trading company and the receiver ceased trading in TSCL on the date of
their appointment, namely 7 February 1996 following a sale of 18 of the 22
shops to Stationery Box Limited. There are consequently no circumstances in
which either CDL or TSCL could re-commence trading given the net deficiency in
assets over liabilities. In the event that, at the end of the receivership of
CDL and TSCL, there is no application made for an appointment of a liquidator,
the receiver should report the situation to the Registrar of Companies. Under
Companies Act 1985 s.652 the Registrar of Companies will initiate proceedings
resulting in the company being struck off the Register of Companies and
thereby ceasing to exist.
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In practice the receiver is almost certain to hand the resulting empty husk of
CDL and TSCL to a government official known as the Official Receiver who will
act as liquidator of the companies. The reason that receivers take this
course of action is that they no longer have any power to destroy or dispose
of books and records of the Company and this power now lies solely with the
liquidator. The appointment of a liquidator, albeit the Official Receiver, is
in the interests of receivers so as to dispose of unwanted books and records.
9. Summary
We can confirm that the effect of the above is that the shareholders of an
English company placed in receivership in England have no further control of
any kind over the company during the entire period that the administrative
receivership continues and that such shareholders will never regain effective
control of the company where, upon the termination of the administrative
receivership, the company will be left with material liabilities and no
assets. Under such circumstances it would follow that the company would be liqu
idated and thereafter the company's existence would be terminated.
The position in summary, therefore, is that:-
(i) CDL and TSCL have lost control of their assets
(ii) It is effectively impossible for the companies to prepare financial
statements for the year ended 31 March 1996 or any period thereafter
(iii) In the light of the deficiency in assets over liabilities and the
fact that the companies do not trade, the winding up of the companies is
inevitable.
10 Chessbourne International Limited
CIL was a company within the CGI group of companies. CIL is registered in
Scotland and accordingly the laws of England do not apply to such a company.
As English solicitors we can give no opinion on Scots law. As a general
matter we can however state that all material provisions of the Companies Act
1985 are common to companies registered in England and Scotland. The
provisions of the Insolvency Act relating to administrative receivership are
not common in the two jurisdictions and there are separate provisions for
England and Scotland.
We have reviewed the different provisions in the Insolvency Act and, without
giving any opinion as to Scots law, can see nothing in the provisions of
Chapter 11 Insolvency Act 1986 (s.50 to 71 inclusive) which contain the
provisions which relate exclusively to Scotland, that would lead to any
different result in Scotland. The only exception to this is that it would
appear that, whereas in England receivership will be completed before
liquidation takes place, it is possible for liquidation to have taken place in
Scotland and for the receivership to take place in parallel with the
liquidation.
The powers of administrative receivers in England and Wales are set out in
Schedule 1 Insolvency Act 1986 and the powers for administrative receivers in
Scotland are set out in Schedule 2 Insolvency Act 1986. The powers are
identical in many respects save for differences arising from the powers
necessary to effect dispositions of land in the two
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jurisdictions. Furthermore, in England the receivers have power to create
subsidiaries and transfer assets within newly created subsidiaries. This
power does not exist in Scotland.
Finally, it should be noted that the two jurisdictions are sufficiently
similar for there to be provision in s.72 Insolvency Act 1986 which states
that where a receiver is appointed in either part of Great Britain (i.e. in
England and Wales or Scotland) that receiver may exercise his powers which
arise from a charge created in one part of Great Britain over assets situated
in the other part of Great Britain.
We have been provided with a copy of the report of the receivers on CIL and
can confirm from that report that the receivers were appointed on 7 February
1996. We can confirm that the receivers effectively ceased trading in CIL on
the date of their appointment save for asset disposals referred to in the
report.
Yours faithfully
/S/ Smithsons
Smithsons
encs
125
D E B E N T U R E
by
THE STATIONERY COMPANY LIMITED
in favor of
THE GOVERNOR AND COMPANY OF
THE BANK OF SCOTLAND
GFL2W463/15
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1. THE STATIONERY COMPANY LIMITED (registered in England and Wales with No.
02731602) (hereinafter called "the Company") whose registered office is at 79
MOSLEY STREET, MANCHESTER, M2 3LT hereby covenants that it will, on demand in
writing made to the Company, pay or discharge to the Governor and Company of
the Bank of Scotland (hereinafter called "the Bank") all moneys liabilities
which shall for the time being (and whether on or at any time after such
demand) be due, owing or incurred in whatsoever manner to the Bank by the
Company, whether actually or contingently and whether solely or jointly with
any other person and whether as principal or surety and whether or not the
Bank shall have been an original party to the including interest, discount,
commission and relevant transaction, and including interest, discount,
commission and other lawful charges or expenses which the Bank may in the
course of its business charge in respect of any of the matters aforesaid or
for keeping count, and so that interest shall be computed and the Company's
account, and so that interest shall be computed and compounded according to
the usual mode of the Bank as well after as before any demand made or judgment
obtained hereunder.
2. A demand for payment or any other demand or notice under this Debenture may
be made or given by any manager or officer of the Bank or of any branch
thereof by letter addressed to the Company and sent by post to or left at the
registered office of the Company or its existing or its last known place of
business (or if more than one any one of such places), and so that such demand
or notice if sent by post shall be deemed to have been made or given at noon
on the day following the day the letter was posted.
3.1. The Company as beneficial owner hereby charges with the payment or
discharge of all moneys and liabilities hereby covenanted to be paid or
discharged by the Company:-
3.1.1 by way of legal mortgage, all the freehold and leasehold property
of the Company now vested in it, whether or not the title thereto is registered
at H.M. Land Registry, including that which is described in the Schedule
hereto, together with all buildings and fixtures (including trade and tenant's
fixtures) now and hereafter thereon and all plant and machinery now and
hereafter annexed thereto for whatever purpose;
3.1.2 by way of fixed charge, all freehold and leasehold property
hereafter belonging to the Company together with all buildings and fixtures
(including trade and tenant's fixtures) thereon and all plant and machinery
annexed thereto for whatever purpose;
3.1.3 by way of fixed charge, all interests not hereinbefore effectively
charged now or hereafter belonging to the Company in or over land or the
proceeds of sale of land, all licences now or hereafter held by the Company to
enter upon or use land, and the benefit of all other agreements relating to
land to which the Company is or may become party or otherwise entitled, and
all trade and tenant's fixtures, plant and machinery now and hereafter annexed
for whatever purpose to all freehold and leasehold property, an interest in
which stands charged hereunder;
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3.1.4 by way of fixed charge, all the goodwill and uncalled capital for
the time being of the Company;
3.1.5 by way of fixed charge, all stocks, shares and other securities now
or hereafter owned (whether at law or in equity) by the Company, and all
rights and interests of the Company in and claims under all policies of
insurance and assurance now or hereafter held by or inuring to the benefit of
the Company;
3.1.6 by way of fixed charge, all patents, trade marks, patent
applications, brand names, service marks, copyrights, rights in the nature of
copyright, design rights, registered designs and other intellectual property
rights and agreements relating to the use by the Company of patents and trade
marks to which the Company is now or may hereafter become entitled and all
agreements under which the Company is now or may become entitled -to the
payment of any royalty fee or similar income;
3.1.7 by way of fixed charge, all book and other debts of the Company
whether now or hereafter existing and whether presently payable or hereafter
falling due for payment and all rights and claims of the Company against third
parties now or hereafter existing and capable of being satisfied by the
payment of money (save as charged under sub-clause 3.1.5. hereof);
3.1.8 by way of floating charge all the Assets (as defined in Clause 19
hereof) whatsoever and wheresoever not hereinbefore effectively charged by way
of fixed charge, including (without limitation) any immovable property of the
Company situate in Scotland, and any Assets falling within any of the types
mentioned in sub-clauses 3.1.3 to 3.1.7 inclusive situate in Scotland but so
that the Company is not to be at liberty to create otherwise than in favor of
the Bank any mortgage or fixed or floating charge or other security upon and
so that no lien (other than a lien arising through operation of law in the
ordinary course of business) shall in any case or in any manner arise on or
affect any part of such Assets either in priority to or pari passu with the
floating charge hereby created, and further that the Company shall have no
power without the consent of the Bank to part with or dispose of any part of
such Assets except by way of sale in the ordinary course of its business.
3.2. The Bank may from time to time by notice in writing to the Company convert
the floating charge created pursuant to sub-clause 3.1.8 into a fixed charge
as regards any Assets thereby charged as specified in any such notice and such
floating charge shall automatically be converted into a fixed charge:
3.2.1 in respect of any Assets which shall become subject to a fixed
charge in favor of any other person or to a disposition otherwise than by way
of sale in the ordinary course of the Company's business immediately upon such
charge or disposition; and
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3.2.2 in respect of all the Assets thereby charged if and when the Company
shall cease to carry on business or to be a going concern;
but so that this sub-clause 3.2 shall not apply to any Assets situate in
Scotland.
3.3. The Company shall not without the previous written consent of the Bank
create or purport or attempt to create any mortgage, charge or encumbrance on
any freehold or leasehold property of the 'Company or any other Asset subject
to a fixed charge hereunder, nor in any way dispose of the equity of
redemption thereof or any interest therein, and the Company hereby applies to
the Chief Land Registrar for a restriction to be entered on the register of
title of all present and future registered freehold and leasehold property to
the Company in the following terms:-
"Except under an order of the Registrar no disposition by the
proprietor of the land is to be registered without the consent
of the proprietor for the time being of (the charge hereby
created)".
3.4. The Company shall, subject to the rights of any prior mortgagee, deposit
with the Bank and the Bank during the continuance of this security shall be
entitled to hold, all deeds and documents of title relating to the Company's
freehold, leasehold and heritable property and stocks, shares and other
securities and all policies of insurance or assurance.
3.5. The Company shall on demand in writing made to the Company by the Bank, at
the cost of the Company:
3.5.1 execute a valid legal mortgage in the Bank's standard form for the
time being, or in such other form as the Bank may reasonably require, of any
freehold or leasehold property presently belonging to the Company which is not
by this Debenture effectively charged by way of legal mortgage and of any
freehold or leasehold property hereafter acquired by the Company;
3.5.2 execute and deliver a standard security or other valid fixed
security acceptable to the Bank over heritable or other property, land and
buildings wherever situate;
3.5.3 execute a valid fixed charge or assignation in security in such form
as the Bank may reasonably require of any Asset subject to a floating charge
hereunder; and
3.5.4 do and concur in all such other acts or things as the Bank may deem
necessary to vest in the Bank title to all or any of the Assets.
3.6. Any fixed mortgage, charge or other security hereafter created by the
Company in favor of the Bank shall have priority over the floating charge
created by this Debenture, except insofar as the Bank shall declare otherwise
whether at or after the time of creation of such fixed security.
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3.7. The Company shall pay into the Company's account with the Bank or as the
Bank may direct all moneys which it may receive in respect of any policies of
insurance or assurance, royalties or book or other debts or any other of the
rights and claims hereinbefore charged to the Bank under subclauses 3.1.5,
3.1.6 and 3.1.7 and until such payment hold all moneys so received upon trust
for the Bank, and shall not without the prior written consent of the Bank
charge, factor, discount or assign any of the said policies, royalties, debts,
rights or claims in favor of any other person or purport so to do.
4. This security shall be a continuing security to the Bank notwithstanding any
settlement of account or other matter or thing whatsoever, and shall be
without prejudice and in addition to any other right, remedy or security,
whether by way of mortgage equitable charge or otherwise howsoever, which the
Bank may now or at any time hereafter or, but for the charges hereby created,
would have on or in respect of the Assets or any part thereof for or in
respect of the moneys hereby secured or any part thereof.
5. During the continuance of this security the Company shall:
5.1 furnish to the Bank copies of the trading and profit and loss account
and audited balance sheet in respect of each financial year of the Company,
its holding company (if any) and every subsidiary of the Company, forthwith
upon the same becoming available and not in any event later than the
expiration of three months from the end of such financial year, and also from
time to time such other financial statements and information respecting the
assets and liabilities of the Company, its holding company and every such
subsidiary as the Bank may reasonably require;
5.2 maintain the aggregate value of the Company's book debts (excluding
debts owing by any Group Company (as defined in Clause 19 hereof) or any other
company from time to time specified by the Bank) and cash in hand as appearing
in the Company's books and of its stock according to the best estimate that
can be formed without it being necessary to take stock for the purpose, at a
level to be fixed by the Bank from time to time and whenever required by the
Bank shall obtain from the Managing Director of the Company for the time being
or, if there shall be no Managing Director, then from one of the Directors of
the Company and furnish to the Bank a certificate showing the said aggregate
value;
5.3 forthwith notify the Bank of the acquisition of any freehold,
leasehold or heritable property by the Company;
5.4 not, without the previous written consent of the Bank, redeem or
purchase any of its own shares or issue any redeemable shares.
6.1. The Company hereby covenants with the Bank that the Company will.
6.1.1 keep all buildings and all fixtures and fittings, plant, machinery
and other effects in good and substantial repair and in good working order
and condition, and will maintain all such insurances as are normally
maintained by prudent companies carrying on similar
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businesses, and in particular will insure and keep insured such of its
Assets as are insurable with an insurance office or underwriters to be
approved by the Bank in writing from time to time in the name of the Company
with the interest of the Bank noted on the policy, or, at the option of the
Bank, in the joint names of the Company and the Bank, against loss or damage
by fire and such other risks (and with the policy containing such provisions
for the protection of the Bank) as the Bank may from time to time require in
their full replacement value for the time being.
6.1.2 pay all premiums and other moneys necessary for effecting and
keeping up such insurances within one week of the same becoming due, and will
on demand produce to the Bank the policy or policies of such insurance and the
receipt for every such payment.
6.2. If the Company shall make default in keeping such buildings,. fixtures and
fittings, plant, machinery and other effects in good and substantial repair
and in good working order and condition, or in effecting or keeping up such
insurances as aforesaid, the Bank may, as it shall think fit, repair and keep
in repair the said buildings and other Assets or any of them (with liberty for
that purpose by itself or its agents to enter upon the freehold and leasehold
property of the Company) or effect or renew any such insurances as aforesaid.
6.3. The Bank shall be entitled to be paid the proceeds of any such policy of
insurance (other than in respect of employers' or public liability) and the
Company hereby irrevocably instructs any insurer in respect of any such policy
to pay such proceeds to the Bank and undertakes to the Bank to issue such
further instructions to that effect as the Bank may require.
6.4. All moneys received on any insurance whatsoever (other than as.,aforesaid)
shall, as the Bank requires, be applied either in. making good the loss or
damage in respect of which the money is received, or in or towards discharge
of the moneys for the time being hereby secured.
6.5. The Company will permit any authorized representative of the Bank at all
reasonable times to enter upon any part of the freehold and leasehold property
of the Company and of any other property where the Company may be carrying out
any contract or other works.
7.1. The Company will at all times observe and perform, and ensure the
observance and performance by any other person or company at any time
occupying the freehold and leasehold property of the Company or any part
thereof of, all restrictive and other covenants to which the same or any part
thereof may from time to time be subject, all obligations on the part of the
Company in any lease or tenancy agreement, all building regulations, and all
restrictions, conditions and stipulations for the time being affecting the
same or any part thereof or the mode of user or enjoyment of the same and
provide to the Bank on request such evidence of such
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observance or performance as the Bank shall require, and within three days
will deliver to the Bank any notice or proceedings served by any landlord and
relating to any alleged breach of the terms of the relevant lease or tenancy.
7.2. The Company will on request produce to or provide for the Bank such
documents or information relating to the freehold and leasehold Property of
the Company or the development thereof as the Bank shall require.
8.1. At any time after the Bank shall have demanded payment of any moneys
hereby secured (and whether or not the Company shall have been accorded
sufficient or any time in which to satisfy the same) or (notwithstanding the
terms of any other agreement between the Company and the Bank save only an
express exclusion of this provision by reference to this Debenture) after the
presentation of a petition applying for an administration order to be made in
relation to the Company pursuant to Section 9 of the Insolvency Act 1986, or
if requested by the Company, the Bank may appoint by writing any person or
persons to be an administrative receiver or administrative receivers
(hereinafter called "the Receiver' which expression shall where the context so
admits include the plural, and any substituted administrative receiver or
administrative receivers, and so that where more than one administrative
receiver is appointed they shall have power to act severally unless the Bank
shall in the appointment specify to the contrary) of all or any part of the
Assets hereby charged. Such an appointment over part only of the Assets
hereby charged shall not preclude the Bank from making any subsequent
appointment of a Receiver over any part of the Assets over which an
appointment has not previously been made by the Bank.
8.2. The Bank may from time to time determine the remuneration of the Receiver
and may (subject to the application of Sections 45 of the Insolvency Act 1986)
remove the Receiver from all or any part of the Assets of which he is the
Receiver, and, at any time after the Receiver shall have vacated office or
ceased to act in respect of any of the Assets, appoint a further Receiver over
all or any part of the Assets or of the part thereof in respect of which he
shall have ceased to act.
8.3. The Receiver shall be the agent of the Company (which shall be solely
liable for his acts, defaults and remuneration) unless and until the Company
goes into liquidation, whereafter he shall act as principal and shall not
become the agent of the Bank, and shall have and be entitled to exercise in
relation to the Company all the powers set out in Schedule 1 to the Insolvency
Act 1986 and all the powers conferred from time to time on Receivers by
statute and in particular b way of addition to but without hereby limiting
such powers (and without prejudice to the Bank's powers) the-Receiver shall
have powers to do the following things namely:
8.3.1 to sell, let or lease or concur in selling, letting or leasing and
to vary the terms or determine, surrender or accept surrenders of leases or
tenancies of, or grant options and licences over. all or any part of the
Assets and so that any such sale may be made for cash payable by instalments
or for shares or securities of another company and the Receiver may promote or
concur in promoting a company to purchase the Assets to be sold;
8.3.2 to sever any fixtures from the property of which they form part;
8.3.3 to exercise all voting and other rights attaching to stocks, shares
and other securities owned by the Company;
132
8.3.4 to make and effect all repairs and improvements;
8.3.5 to redeem any prior encumbrance and co settle and pass the accounts
of the encumbrancer; any accounts so settled and passed shall (subject to any
manifest error) be conclusive and binding on the Company and the moneys so
paid shall be deemed to be an expense properly incurred by the Receiver;
8.3.6 to do all such other acts and things as may be considered by the
Receiver to be incidental or conducive to any of the matters or powers
aforesaid, or otherwise incidental or conducive to the preservation,
improvement or realization of the Assets.
8.4. A person dealing with the Receiver in good faith and for value shall not
be concerned to enquire whether the Receiver is validly appointed or acting
within his powers.
9. The Company hereby irrevocably appoints the Bank (whether or not the
Receiver has been appointed) and also (as a separate appointment) the Receiver
severally the Attorney and Attorneys of the Company, for the Company and in
its name and on its behalf and as its act and deed or otherwise to execute and
deliver and otherwise perfect any deed, assurance, agreement, instrument or
act which may be required of the Company hereunder or may be deemed proper for
any of the purposes aforesaid, and to convey or transfer a legal estate to any
purchaser of any freehold, leasehold or heritable property hereby charged.
10. Any moneys received under the powers hereby conferred shall, subject to the
repayment as far as necessary of any claims having priority to this Debenture,
be paid or applied in the following order of priority:-
10.1 in satisfaction of all costs, charges and expenses properly incurred
and payments properly made by the Bank or the Receiver, and of the
remuneration of the Receiver;
10.2 in or towards satisfaction of the moneys outstanding and secured by
this Debenture in such order as the Bank may at its discretion require;
10.3 as to the surplus (if any), to the person or persons entitled
thereto.
Provided that the Receiver may retain any moneys in his hands for so long as
he shall think fit, and the Bank is also to be at liberty, without prejudice
to any other rights the Bank may have at any time and from time to time, to
place and keep for such time as the Bank may think prudent, any moneys.
received, recovered or realized under or by virtue of this Debenture to or at
a separate or suspense account to the credit either of the Company or of the
Bank, as the Bank shall think fit without any intermediate obligation on the
Bank's part to apply the same or any part thereof in or towards the discharge
of the moneys due or owing to the Bank as aforesaid by the Company.
132
11. During the continuance of this security:
11.1 no statutory or other power of granting or agreeing to grant or of
accepting or agreeing to accept surrenders of leases or tenancies of the
freehold and leasehold property hereby charged or any part thereof shall be
capable of being exercised by the Company without the previous written consent
of the Bank;
11.2 the Company shall not be entitled to part with possession (otherwise
than on the determination of any lease, tenancy or licence) of any property
hereby charged, or to share the occupation thereof with any other person or
persons, or to surrender or purport to surrender or permit to be forfeited the
lease of any leasehold property hereby charged without such consent as
aforesaid;
11.3 Section 93 of the Law of Property Act 1925 dealing with the
consolidation of mortgages shall not apply to this security.
12.1 Section 103 of the Law of Property Act 1925 shall not apply to this
security but the statutory power of sale, shall as between the Bank and a
purchaser from the Bank, arise on and be exercisable at any time after the
execution of this security, provided that the Bank shall not exercise the said
power of sale until payment of moneys hereby secured has been demanded or the
Receiver has been appointed, but this proviso shall not affect a purchaser or
put him upon inquiry whether such demand or appointment has been validly made.
12.2 The statutory powers of sale, leasing and accepting surrenders exercisable
by the Bank hereunder are hereby extended so as to authorize the Bank, whether
in its own name or in that of the Company to grant a lease or leases of the
whole or any part or parts of the freehold and leasehold property of the
Company with such rights relating to other parts thereof and containing such
covenants on the part of the Company and generally on such terms and
conditions (including the payment of money to a lessee or tenant or on a
surrender) and whether or not at a premium as the Bank shall think fit.
13. All costs, charges and expenses incurred hereunder by the Bank, and all
other moneys paid by the Bank or by the Receiver in perfecting or otherwise in
connection with this security or in respect of the Assets, including (without
prejudice to the generality of the foregoing) all moneys expended by the Bank
under Clauses 6 and 17 hereof and all costs of the Bank (on a solicitor and
own client basis) of all proceedings for the enforcement of this security or
for obtaining payment of moneys hereby secured or arising out of or in
connection with the acts authorized by Clause 8 hereof and all costs and
losses to the Bank arising in consequence of any default by the Company in the
performance of its obligations and all administrative charges of the Bank
based on the time spent by it in connection with any of the foregoing shall be
recoverable from the Company as a debt and may be debited to any account of
the Company and shall bear interest accordingly and shall be charged on the
Assets.
14. On receiving notice that the Company has encumbered or disposed of the
Assets or any part thereof the Bank shall be entitled to close the Company's
then current account or accounts and to open a new account or accounts
134
with the Company, and (without prejudice to any right of the Bank to combine
accounts) no money paid in or carried to the Company's credit in any such new
account shall be appropriated towards or have the effect of discharging any
part of the amount due to the Bank on any such closed account. If the Bank
does not open a new account or accounts immediately on receipt of such notice
it shall nevertheless be treated as if it had done so at the time when it
received such notice and as from that time all payments made by the Company to
the Bank shall be credited or be treated as having been credited to such new
account or accounts and shall not operate to reduce the amount due from the
Company to the Bank at the time when it received such notice.
15. The Company agrees that any moneys from time to time standing to its credit
on any account with the Bank may be retained as cover for and, at any time
without notice to the Company, applied by the Bank in or towards payment or
satisfaction of any moneys or liabilities now or hereafter from time to time
due owing or incurred by the Company to the Bank in whatsoever manner whether
presently payable or not, whether actually or contingently, whether solely or
jointly with any other person And whether as principal or surety.
16. The Bank may from time to time seek from any other person having dealings
with the Company such information about the Company and its affairs as the
Bank may think fit, and the Company hereby authorizes and requests any such
person to provide any such information to the Bank and agrees to provide such
further authority in this regard as the Bank may from time to time require.
17. The Company shall at its own cost at any time if so requested by the Bank
appoint an accountant or firm of accountants nominated by the Bank to
investigate the financial affairs of the Company and/or any subsidiary of the
Company and report thereupon to the Bank, and hereby authorizes the Bank
itself at any time to make such appointment on behalf of the -Company or on
its own account as it shall think fit, and in every such case the fees and
expenses of such accountant or firm shall be paid by the Company and may be
paid by the Bank on behalf of the Company, and the Bank may at the time of
such appointment or thereafter guarantee payment by the Company of such fees
and expenses.
18. It is hereby certified that the security created by this Debenture, both in
respect of freehold and leasehold property of which the Company is registered
at H.M. Land Registry as proprietor and otherwise, does not contravene any of
the provisions of the Memorandum and Articles of Association of the Company.
19. In this Debenture where the context so admits:-
19.1 the expression 'the Bank" shall include persons deriving title under
the Bank;
19.2 any reference to any statute or any section of any statute shall be
deemed to include reference to any statutory modification or re-enactment
thereof for the time being in force;
135
19.3 "Assets" shall mean all the undertaking, property and assets of the
Company whatsoever and wheresoever present and future;
19.4 "Group Company" shall mean any company which is a subsidiary company
or a holding company (as such terms are defined in Section 736 of the
Companies Act 1985 which definitions shall apply for all the purposes hereof)
of the Company or a subsidiary of any such holding company or any company
which has 50% or more of the holders of its equity share capital in common
with the Company.
136
IN WITNESS WHEREOF this Debenture has been executed by the Company as a deed
and signed on behalf of the Bank this sixteenth day of November 1993.
THE SCHEDULE ABOVE REFERRED TO
County and District Title No.(s)
(or London Borough) (if registered land) Address or Description
________________________________________________________________________
EITHER
THE COMMON SEAL of the Company was
hereunto affixed pursuant to a resolution of the
Board of Directors in the presence of:
Director /s/ Brain John Baylis
Director/Secretary /s/ Susan A.M. Crisp
OR
Executed and Delivered as a deed by the
Company (pursuant to a resolution of its
Board of Directors) acting by
Director____________________________
Director/Secretary____________________
Signed on behalf of the Bank by
/s/ Anne Mc Queen
Anne Mc Queen
The address for service of the Bank in the case of any registered land is:
Bank of Scotland,
Legal Services Department
Teviot House
41 South Gyle Crescent
EDINBURGH
EH12 9DR
Revised 21.9.93
137
[REGISTRAR SEAL]
CERTIFICATE OF THE REGISTRATION
OF A MORTGAGE OR CHARGE
Pursuant to section 401(2) of the Companies Act 1985
COMPANY No.02731602
THE REGISTRAR OF COMPANIES FOR ENGLAND AND WALES HEREBY CERTIFIES THAT A
DEBENTURE DATED THE 16th NOVEMBER 1993 AND CREATED BY THE STATIONERY COMPANY
LIMITED FOR SECURING ALL MONIES DUE OR TO BECOME DUE FROM THE COMPANY TO THE
GOVERNOR AND THE COMPANY OF THE BANK OF SCOTLAND ON ANY ACCOUNT WHATSOEVER WAS
REGISTERED PURSUANT TO CHAPTER 1 PART XII OF THE COMPANIES ACT 1985 ON THE
30th NOVEMBER 1993.
GIVEN AT COMPANIES HOUSE, CARDIFF THE 2nd DECEMBER 1993.
/s/ P. Jones
for the Registrar of Companies
[DEPARTMENT STAMP APPEARS
HERE DATED 6 DECEMBER 1996]
CH
COMPANIES HOUSE HC026
138
CHESSBOURNE INTERNATIONAL
SECTION 4
4.1 Statement of Affairs
139
Rule 3.2 The Insolvency Act of 1986 Form 3.1 (scot)
NOTICE REQUIRING SUBMISSION OF RECEIVERSHIP
STATEMENT OF AFFAIRS
Pursuant To Section 66(1) and (4) of the Insolvency Act 1986 and
Rule 3.2(1) of the Insolvency (Scotland) Rules 1986
(a) Insert name of (a) CHESSBOURNE INTERNATIONAL LIMITED
the company in --------------------------------------------------------------
receivership
(b) Insert full name Take note that I, (b) IAIN T WATTERS
of receiver require you (c) ___________________________________________
to submit statement as to the affairs of the company by
(c) Insert date by (d) 6 MARCH 1996
which statement
required to
submit statement
(d) Insert date by
which statement
must by The statement shall be in the prescribed form of which a copy is
submitted under attached.
section 66(a) and
(5)
Dated this 13th day of the FEBRUARY 1996
Signed________________________________________________
Warning
If without reasonable excuse you fail to comply with any
obligation under Section 66, you will be liable:
(i) On summary conviction to fine not exceeding the
statutory maximum and, for the continued contravention, to a daily
default fine not exceeding one-tenth of the statutory maximum.
(ii) On conviction on indictment to a fine.
140
Pursuant to sections 95, 99 and 131 of the Insolvency Act 1986
and Rule 4.7 and 4.8 of the Insolvency (Scotland) Rules 1986
Insert name of the Statement as to affairs of
company CHESSBOURNE INTERNATIONAL LTD.
- - ---------------------------------------------------------------------------------------------
Affidavit
This affidavit must be sworn/affirmed before Notary Public, Justice
of the Peace or Commissioner for Oaths or other person duly
authorised to administer oaths, when you have completed the rest
(a) Insert full of this form.
name(s) and
occupation(s) of I/WE (a) BRIAN JOHN BAYLIS
deponents ___________________________________________________________________
(b) Insert full of (b) DARAT ALKHAIT, BEECHCROFT,
address(es) CHISLEHURST, KENT, BR7 5DB
do swear/affirm that the statement set out overleaf and the list A
to G annexed and signed as relative hereto are to the best of my/our
knowledge and belief a full, true and complete statement as to the
affairs of the above named company as at
(c) Insert date of (c) 7th February 1996.
commencement
of the winding up
which is:
(i) in a
voluntary
winding up the
date of the Sworn/affirmed at 30 High Street Chislehurst in the London Borough
resolution by the of Bromley
company for Date 19th day of March 1996
winding up Signature(s) of deponent(s) /s/ Brian John Baylis
[section 86]. and
(ii) in a winding
up by the court,
the date of the Before me /s/ John Harrison
presentation of Person administering the oath of affirmation
of the petition for
winding up JOHN HARRISON
unless it is A SOLICITOR EMPOWERED
preceded by a TO ADMINISTER OATHS
resolution for
voluntary The person administering the oaths or affirmation IS particular
winding up under requested, before swearing the affidavit, to make sure that the full
(1) [section 129], name, address and description of the Deponent(s) are stated, and
but in the case of to ensure that any crossings-out or alterations in the printed form are
a creditors' initialled.
voluntary
winding up the
date inserted
should be the
nearest NOTE
practicable date This affidavit should be sworn/affirmed and the statement made out
before the date and submitted:
of the meeting of (1) in a winding up by the court by any person required to do so
creditors under under section 131 of the Act by the Liquidator;
section 98. (2) in a members' voluntary winding up which becomes a
creditors' voluntary winding up section 95 and 96, by the Liquidator
under Section 95; and
(3) in a creditors' voluntary winding up by the directors.
141
Rule 4.7 Form 4.4 (Scot)
4.8 (contd)
STATEMENT as to affairs of the company as at [INSTRUCTIONS]
Estimated Please do not
Realisable Value write in
£
Assets £ the margin
Assets not specifically secured (as per List "A") 554,800 Please complete
legibly, preferably in
Assets specifically secured (as per List "B") black type, or
bold black lettering
Estimated realisable value 196,176
Less: Amount due to secured creditors 196,176
Estimated surplus ---
Estimated Total Assets available for preferential creditors,
holders of floating charges and unsecured creditors 554,800
LIABILITIES
Preferential creditors (as per List "C") 129,193
Estimated balance of assets available for
holders of floating charges and unsecured creditors 430,607
Holders of floating charges (as per List "D") 3,155,635
Estimated surplus/deficiency as regards
holders of floating charges (2,725,028)
Unsecured Creditors
£
Trade accounts (as per List "E") 738,500
Bills payable (as per List "F") ---
Contingent or other liabilities (as per List "G") 147,274
Total unsecured creditors 885,834
Estimated Surplus/Deficiency as regards creditors (3,610,867)
Issued and Called-up Capital 1,526,750
Estimated Surplus/Deficiency as regards members 5,137,617
These figures must be read subject to the following:-
[(a) There is no unpaid capital liable to be called up]: delete as
[(b) The nominal amount of unpaid capital liable to be called appropriate
up is £_______________ estimated to produce
£______________ which is/is not charged in favour of the
holders of Floating Charges
The estimates are subject to expenses of the Liquidation and to any
surplus or deficiency
on trading pending realisation of the Assets. Page 2
142
Please do not Statement of Affairs LIST "A"
write in Assets not specifically secured
the margin
Please complete
legibly, preferably in
black type, or
bold black lettering
Particulars of assets Book Value Estimated to produce
£ £
Balance at bank --- ---
Cash in hand --- ---
Marketable Securities (as per schedule I) --- ---
Bills receivable (as per schedule II) --- ---
Trade debtors (as per schedule III) 333,139 136,000
Loans and advances (as per schedule IV) 1,428,872 ---
Unpaid calls (as per schedule V) ---- ---
Stock in trade 659,343 400,000
_________________________
other debts and prepayment 111,359 8,800
Work in progress ---- ----
______________________
______________________
Heritable property
Leasehold property 241 ---
Plant, machinery and vehicles 92,258 15,000
Furniture and Fittings, etc. --- ---
Patents, trade marks, etc. --- ---
Investments other than marketable securities --- ---
Other property --- ---
Total 2,625,212 554,800
Signed /s/ Brian John Baylis Dated 18/3/96
Brian John Baylis
THIS AND THE FOLLOWING 21 PAGES IS LIST A REFERRED TO IN THIS AFFIDAVIT OF
BRIAN JOHN BAYLIS SWORN BEFORE ME ON THE 19TH DAY OF MARCH 1996
/S/ JOHN HARRISON
JOHN HARRISON
A SOLICITOR EMPOWERED
TO ADMINISTER OATHS
143
Please do not
write in
the margin
Please complete SCHEDULE I TO LIST "A"
legibly, preferably Statement of Affairs
in black type, or Marketable Securities
bold black lettering
Names to be arranged in alphabetical order and numbered
consecutively
No Name of organization in which Details of Book Value Estimated
securities are held securities held to produce
£ £:
---- ----
Signed /s/ Brian John Baylis Dated 18/3/96
Brian John Baylis
144
Please do not
write in
the margin
Please complete SCHEDULE I TO LIST "A"
legibly, preferably Statement of Affairs
in black type, or Bills of exchange, promissory notes, etc. available as
assets
bold black lettering
Names to be arranged in alphabetical order and numbered
consecutively
No Name and address Amount of Date Estimated Particulars of any
of acceptor of bill bill or note when to produce property held as
or note due security for payment
£ £ of bill or note
----
Signed /s/ Brian John Baylis Dated 18/3/96
Brian John Baylis
145
CHESSBOURNE INTERNATIONAL LTD
Minutes of a meeting of the Board of Directors
held on Monday 18th March 1995
Present Mr.B.J.Baylis
Mrs.S.A.M.Crisp
Mr M.Holland
Mrs. K.Sparkes
1. BJB reminded the Board that under section 66 of the Insolvency Act 1986
that they were required to submit a Statement of Affairs of the Company. With
the agreement of the Receivers, a Statement had been prepared by Ian Mills
which to the best of our knowledge is a true and fair representation of the
Company's affairs as at 7th February 1996.
2. In the interests of expediency BJB had consulted Mr. Alan Pepper, The
Receivers representative who after in turn consulting their own legal advisers
confirmed that it would be in order for one member to swear the statement on
behalf of The Board.
3. IT WAS RESOLVED that the Statement of Affairs as prepared be adopted
and that BJB be instructed to Swear on behalf of the Board.
4. The being no other business, the meeting ended.
/s/ B.J.Baylis
B.J.Baylis
146
Please complete SCHEDULE III TO LIST "A"
legibly, preferably Statement of Affairs
in black type, or Trade debtors
bold black lettering
Names to be arranged in alphabetical order and numbered
consecutively
No Name and address Particulars Amount of Estimated to
of debtor of any debt produce
Securities
held for
debt £ £
As per Listing 333,139 136,000
Note:
If the debtor to the company is also a creditor, but for a lesser amount than
his indebtedness, the gross amount due to the company and the amount of the
contra account should be shown in the third column and only the balance be
inserted in the fourth column. No such claim should be included in List "E"
Signed /s/ Brian John Baylis Dated 18/3/96
Brian John Baylis
147
CORNICHE DISTRIBUTION
SECTION 4
4.1 Statement of Affairs
148
AA&Co
Intraoffice memorandum
==========================================================================
To To (for reply)
THE FILES
___________________________________________________________________________
From Ext. Date From Ext. Date
NEIL A BOYD 21/10/96
____________________________________________________________________________
Subject
ATTACHED STATEMENT OF AFFAIRS: CORNICHE
____________________________________________________________________________
[ ] Follow up please [ ] Prepare reply for [ ] As requested
[ ] Note and return my signature [ ] For your review
[ ] Note and forward [ ] Send me information [ ] For your information
to files required to answer [ ] As per conversation
[ ] See (phone) me re [ ] For signature, if
attached you approve
____________________________________________________________________________
The attached statement of affairs has been marked "COPY" in error.
This is the ORIGINAL.
========
Disregard the over-writing of "COPY".
/s/ Neil
Please call me - extension [ ]
149
COPY COPY COPY COPY COPY COPY COPY COPY
/s/ B Baylis No. of 19__
Statement of Affairs IN THE HIGH COURT OF JUSTICE
No. 2.9 (incorporating
Forms 2.9, 3.2, 4.18
and 4.19) (Rules 2.12, Chancery Division
3, 4, 4.34 - CVL)
(1)(1) Delete title of the
Court and number
where appropriate. Companies Court
(2) Insert name of IN THE MATTER OF (2) CORNICHE DISTRIBUTION LTD.
Company.
AND
IN THE MATTER of the Insolvency Act of 1986.
Statement as to Affairs of (2) CORNICHE DISTRIBUTION LTD.
(3) Delete as
appropriate. on the 28th February 1996 the date of the (3)
[administration order] [THE ADMINISTRATIVE
[WHAT IS IN RECEIVER'S APPOINTMENT] [resolution for winding-up]
UPPERCASE IS [opinion formed by the liquidator under Section 95 of the
WHAT THE COMPANY Insolvency Act 1986].
CHOOSE OR FILLED IN.]
__________________________________________________
Affidavit
This affidavit must be SWORN or affirmed before a Solicitor or
Commissioner of Oaths when you have completed the rest of this form
(4) Insert name and I(4) BRIAN JOHN BAYLIS - COMPANY DIRECTOR
occupation.
(5) Insert full address. of DARAT ALKHAIR, BEECHCROFT, CHISLEHURST, KENT, BR7 5DE
make oath and say that the several pages exhibited hereto and marked
are to the best of my knowledge and belief a full, true and complete
statement as to the affairs of the above named company as at 28th FEBRUARY
1996, the date (3) [of the administration order] [of the appointment of the
Administrative Receiver] [of the resolution for winding-up] [I formed the
opinion that the company would be unable to pay its debts in full (together
with interest) within the period stated in the directors' declaration of
solvency made under Section 89 of the Insolvency Act 1986]
and that the said company carried on business as
Sworn at 30 High Street Chislehurst
in the London Borough of Bromley
Date 19th March 1996 /s/ B Baylis
Before me /s/ John Harrison
JOHN HARRISON
A SOLICITOR or Commissioner of Oaths A SOLICITOR EMPOWERED
TO ADMINISTER OATHS
Before swearing the affidavit the SOLICITOR or Commissioner is
particularly requested to make sure that the full name,
address and description of the Deponent are stated, and to initial
602.94 1 of 4 any crossings-out or other alterations in the printed form. A deficiency in
the affidavit in any of the above respects will mean that it
SUED 01/94 is refused by The court, and will need to be re-sworn.
150
Corniche Distribution Limited (in Administrative Receivership)
Al - Summary of Liabilities
Estimated to
Realise
£
Estimated total assets available for preferential creditors
(carried forward from Page A) £ (118,098)
Liabilities
Preferential creditors:
£
Employees 4,566
Inland Revenue 51,501
Customs & Excise 3,825
59,892
Estimated deficiency/surplus as regards preferential creditor
£ (177,990)
Debts secured by a floating charge: £
-----
Estimated deficiency/surplus of assets available for non-
(177,990)
preferential creditors
Non-preferential claims: £
Trade creditors 290,597
Other creditors 164,534
Amounts due to group companies 195,562
Royal Bank of Scotland 16,579
Employees 776,934
Directors Loan 100,000
1,544,206
Estimated deficiency/surplus as regards creditors £ (1,722,196)
Issued and called up capital:
£
Ordinary shares 2,500,000
2,500,000
Estimated total deficiency/surplus as regards members £ (4,222,196)
Signature /s/ B Baylis Date 18/3/96
151
Corniche Distribution Limited (in Administrative Receivership)
A - Summary of Assets
Book Estimated to
Value Realise
£ £
Assets
Assets specifically pledged:
Lloyds Bank PLC:
Freehold property - Old Bank Mill, Leek 164,000 150,000
Mortgage loan (86,162) (86,162)
£ 63,838
Bank of Scotland plc:
Investment in Chessbourne International Limited 291,360 ---
Investment in The Stationery Company Limited 1,000,000 ---
Investment in Kassel Limited 9,597 ---
Other debtors and prepayments 22,432 ---
Amount due from Corniche Group, Inc. 1,990,112 ---
Bank of Scotland loan account (191,936) (191,936)
£ (128,098)
Assets not specifically pledged:
Plant, machinery and equipment 8,800 2,000
Motor vehicles 718 8,000
£ (118,098)
Estimated total assets available for preferential creditors (118,098)
Signature /s/ B Baylis Date 18/3/96
This and the preceding page is the statement referred to in the affidavit of
Brian John Baylis sworn before this 19th day of March 1996.
/s/ John Harrison
JOHN HARRISON
A SOLICITOR EMPOWERED
TO ADMINISTER OATHS
152
CORNICHE DISTRIBUTION LTD.
Minutes of a meeting of the Board of Directors
held on Monday 18th March 1995
Present Mr.B.J.Baylis
Mrs.S.A.M.Crisp
1. BJB reminded the Board that under Section 47 of the Insolvency Act 1986
that they were required to submit a Statement of Affairs of the Company. With
the agreement of the Receivers, a Statement had been prepared by Ian Mills
which to the best of our knowledge is a true and fair representation of the
Company's affairs as at 28th February 1996.
2. In the interests of expediency BJB had consulted Mr. Alan Pepper, The
Receivers representative who after in turn consulting their own legal advisers
confirmed that it would be in order for one member to swear the statement on
behalf of The Board.
3. IT WAS RESOLVED that the Statement of Affairs as prepared be adopted
and that BJB be instructed to Swear on behalf of the Board.
4. The being no other business, the meeting ended.
/s/ B.J.Baylis
B.J.Baylis
153
Corniche Distribution Limited (in Administrative Receivership)
A - Summary of Assets
Book Estimated to
Value Realize
£ £
Assets
Assets specifically pledged:
Lloyds Bank PLC:
Freehold property - Old Bank Mill, Leek 164,000 164,000
Mortgage loan (86,162) (86,162)
£ 77,838
Bank of Scotland plc:
Investment in Chessbourne International Limited 291,360 ---
Investment in The Stationery Company 1,000,000 ---
Investment in Kassel Limited 9,597 ---
Plant, machinery and equipment 8,800 5,000
Motor vehicles 718 5,000
Other Debtors and prepayments 22,432 ---
Amount due from Corniche Group, Inc. 1,990,112 ---
Bank of Scotland loan account (191,936) (191,936)
£ (104,098)
Assets not specifically pledged:
Estimated total assets available for preferential creditors (130,358)
Signature Date
154
Corniche Distribution Limited (in Administrative Receivership)
Al - Summary of Liabilities
Estimated to
Realise
£
Estimated total assets available for preferential
creditors (carried forward from Page A) (130,358)
Liabilities
Preferential creditors: £
Employees 1,337
Inland Revenue 51,501
Customs & Excise 3,825
56,663
Estimated deficiency/surplus as regards
preferential creditor £ (187,021)
Debts secured by a floating charge: £
---
Estimated deficiency/surplus of assets available for non- £ (187,021)
preferential creditors
Non-preferential claims: £
Trade creditors 290,597
Other creditors 164,534
Amounts due to group companies 195,562
Royal Bank of Scotland 16,579
Directors Loan 100,000
767,272
Estimated deficiency/surplus as regards creditors £ (954,293)
Issued and called up capital: £
Ordinary shares 2,500,000
2,500,000
Estimated total deficiency/surplus as regards members £ (3,454,293)
Signature________________________________ Date _____________
155
Corniche Distribution Ltd
Statement of Affairs workings
Nominal Account Amount
Investment in Chessbourne International 291,360.00
Investment in The Stationery Company 1,000,000.00
Investment in Kassel 9,597.45
Fixtures & fittings - cost 20,036.80
Fixtures & fittings - depn. (17,961.08)
Plant & Machinery - cost 15,665.18
Plant & Machinery - depn. (8,940.54)
BMW 318i - cost 15,000.00
BMW 318i - depn. (15,000.00)
Volvo - cost 1,000.00
Volvo - depn. (282.00)
Freehold property - cost 165,897.94
Freehold property - depn. (1,897.94)
Other debtors 17,004.41
Loan account - E. WARD 665.81
Insurance recharge suspense 4,748.21
Petty cash 14.25
Recharges - Chessbourne (8,451.56)
Bank of Scotland - loan (191,936.42)
Royal Bank of Scotland - Current (18,165.32)
Royal Bank of Scotland - High Interest 1,586.92
Royal Bank of Scotland - No. 2 (0.60)
Lloyds Bank mortgage (86,162.21)
Creditors Control (575,517.66)
BJB Directors Loan (100,000.00)
VAT Paid (27,359.52)
VAT Inputs 249.46
VAT Outputs (4,047.71)
Salary Control (1,337.37)
PAYE Control account (27,099.97)
NI Control account (24,400.63)
HP Agreement control (485.49)
current account - Chessbourne (21,285.23)
Current account - Stationery Company (69,361.41)
Current account - Kassel Ltd. (128,237.57)
Current account - Corniche Group Inc. 1,990,111.79
Ordinary shares (2,500,000.00)
(113,725.73)
Accrued against PL debit balances (1,288)
(115,014)
156
Corniche Distribution Ltd
Statement of Affairs workings
Nominal Account Amount
Investment in Chessbourne International
Investment in The Stationery Company
Investment in Kassel
Fixtures & fittings - cost
Fixtures & fittings - depn.
Plant & Machinery - cost
Plant & Machinery - depn.
BMW 318i - cost
BMW 318i - depn.
Volvo - cost
Volvo - depn.
Freehold property - cost
Freehold property - depn.
Other debtors
Loan account - E. WARD
Insurance recharge suspense
Petty cash
Recharges - Chessbourne (8,451.56)
Bank of Scotland - loan
Royal Bank of Scotland - Current
Royal Bank of Scotland - High Interest
Royal Bank of Scotland - No. 2
Lloyds Bank mortgage
Creditors Control (406,875.14)
BJB Directors Loan
VAT Paid (27,359.52)
VAT Inputs 249.46
VAT Outputs (4,074.71)
Salary Control (1,337.71)
PAYE Control account (27,099.97)
NI Control account (24,400.63)
HP Agreement control (485.49)
current account - Chessbourne
Current account - Stationery Company 69,361.43
Current account - Kassel Ltd. (128,237.57)
Current account - Corniche Group Inc. 1,990,111.79
Ordinary shares (2,500,000.00)
1,990,111.79
1,990,112.00
Accrued against PL debit balances 1,990,112.00
157
THE STATIONERY COMPANY
SECTION 4
4.1 Statement of Affairs
158
No. of 19
Statement of Affairs IN THE HIGH COURT OF JUSTICE
No. 2.9 (incorporating
Forms 2.9, 3.2, 4.18
and 4.19) (Rules 2.12, Chancery Division
3. 4, 4.34 - CVL)
(1)(1) Delete title of the
Court and number
where appropriate. Companies Court
(2) Insert name of IN THE MATTER OF (2) THE STATIONERY COMPANY LTD.
Company.
AND
IN THE MATTER of the Insolvency Act of 1986.
Statement as to Affairs of (2) THE STATIONERY COMPANY LTD.
(3) Delete as
appropriate. on the 7th February 1996 the date of the (3)[administration order]
[THE ADMINISTRATIVE RECEIVER'S APPOINTMENT] [resolution for winding-up]
[opinion formed by the liquidator under Section 95 of the
Insolvency Act 1986].
__________________________________________________
Affidavit
This affidavit must be sworn or affirmed before a Solicitor or
Commissioner of Oaths when you have completed the rest of this form
(4) Insert name and I(4) BRIAN JOHN BAYLIS - COMPANY DIRECTOR
occupation.
(5) Insert full address. of DARAT ALKHAIR, BEECHCROFT, CHISLEHURST, KENT, BR7 5DE
make oath and say that the several pages exhibited hereto
and marked are to the best of my knowledge and belief a full,
true and complete statement as to the affairs of the above named
company as at 7th February 1996, the date (3) [of the administration
order] [of the appointment of the Administrative Receiver] [of the
resolution for winding-up] [I formed the opinion that the company would
be unable to pay its debts in full (together with interest) within
the period stated in the directors' declaration of solvency made under
Section 89 of the Insolvency Act 1986]
and that the said company carried on business as
Sworn at 30 High Street Chislehurst
in the London Borough of Bromley
Date 19th March 1996 /s/ B Baylis
Before me /s/ John Harrison
JOHN HARRISON
A Solicitor or Commissioner of Oaths A SOLICITOR EMPOWERED
TO ADMINISTER OATHS
Before swearing the affidavit the Solicitor or Commissioner is
particularly requested to make sure that the full name, address and
602.94 1 of 4 description of the Deponent are stated, and to initial any
crossings-out or other alterations in the printed form. A deficiency
in the affidavit in any of the above respects will mean that it is
SUED 01/94 refused by the court, and will need to be re-sworn.
159
The Stationery Company Limited (in Administrative Receivership)
A - Summary of Assets
Book Estimated to
Value Realise
£ £
Assets
Assets specifically pledged:
Freehold 18,656 ---
Short Leasehold 800,573 500,000
Plant & Equipment 5,530 ---
Fixtures & Fittings Cost 334,902 ---
Trademarks 1,177 ---
Stocks 348,300 ---
Trade Debtors 1,394,106 155,000
Other Debtors 311,560 15,000
Amounts due from Group Companies 52,175 ---
3,266,979 670,000
Debts secured by a Fixed Charge 233,170
Bank of Scotland 233,170
3,033,809 436,830
Assets not specifically pledged:
New Store-set-up costs 17,858 ---
Estimated total assets available for
preferential creditors 3,051,394 436,830
Signature /s/ Brian John Baylis Date 18/3/96
This and the following five pages are the statement referred to in the
affidavit of Brian John Baylis sworn before me on this 19th day of March 1996.
/s/ John Harrison
JOHN HARRISON
A SOLICITOR EMPOWERED
TO ADMINISTER OATHS
160
The Stationery Company Limited (in Administrative Receivership)
A1 - Summary of Liabilities
Estimated to
Realise
£
Estimated total assets available for
preferential creditors carried forward from Page A) 436,830
Liabilities
Preferential creditors: £
Employees 100,475
Inland Revenue 120,639
Customs & Excise 165,099
Pension Scheme 322
386,535
Estimated deficiency/surplus as
regards preferential creditor £ 50,295
Debts secured by a floating charge: £
Estimated deficiency/surplus of £ 50,295
assets available for non-preferential creditors
Non-preferential claims: £
Trade creditors 1,634,067
Other creditors 183,331
Amounts due to group companies 1,274,230
3,091,628
Estimated deficiency/surplus as regards creditors £ (3,041,333)
Issued and called up capital:
Ordinary shares 1,000,000
"B" Ordinary shares ---
Preference shares ---
1,000,000
Estimated total deficiency/surplus as regards members £ (4,041,333)
Signature /s/ Brian John Baylis Date 18/3/96
161
NOTE You must identify creditors under hire-purchase, chattel leasing or
conditional sale agreements and customers claiming amounts paid in advance of
the supply of goods or services and creditors claiming retention of title over
property in the company's possession. If there is insufficient space,
continuation sheets should be used and annexed hereto securely to the rest of
the form.
Name of creditor Address Amount Details of any security Date security Value of
or claimant (with postcode) Of debt held by creditor Given security
Tippex Limited Unit 5 Admiralty Way 1,824,95
Southern Trade Centre
Camberley
Surrey
Handley Printers
Limited Crosland Industrial Estate 21,933.96
125 Stockport Road West
Bredbury
Stockport
Helix Limited P.O. Box 15 16,049.86
Engine Lane
Lye
Stourbridge
West Midlands
Euro Packaging
Plc Unit m 6,432.54
Waterloo Road
Yardley
Birmingham
Artcare Limite Challenger House 9,934.47
194 Clerkenwell Close
London
Platignum Ltd 20 Greenfield 20,398.84
Royston
Herts
SG85XX
Signature /s/ Brian John Baylis Date 18/3/97
161
NOTE You must identify creditors under hire-purchase, chattel leasing or
conditional sale agreements and customers claiming amounts paid in advance of
the supply of goods or services and creditors claiming retention of title over
property in the company's possession. If there is insufficient space,
continuation sheets should be used and annexed hereto securely to the rest of
the form.
Name of creditor Address Amount Details of any security Date security Value of
or claimant (with postcode) Of debt held by creditor Given security
Holland Enterprises Ltd 18 Bourne Court 614.96
Southend Road
Woodford Green
Essex IG8 8HD
Framemaker Products Ltd Stanley Street 693.73
Buton-on-Trent
Staffs.
Maxpress Limited Danebridge Mill 7,424.89
Mill Street
Congleton
Chesshire CW12 1XX
William B Harris 5 Lea Road 39,227.50
Abingdon
Northampton NN1 4PE
Brown Watson Ltd The Old Mill 8,171.95
76 Fleckney Road
Kibworth Beauchamp
Leicester LE8 0HG
Kibworth Books 2,667.00
(MacMillan
Distribution Ltd) Houndsmills
Basingstoke
Hants. RG1 6XS
Kaleidoscope P.O. Box 76 29,480.28
Raynesway
Derby DE21 7BL
Signature /s/ Brian John Baylis Date 18/3/97
163
NOTE You must identify creditors under hire-purchase, chattel leasing or
conditional sale agreements and customers claiming amounts paid in advance of
the supply of goods or services and creditors claiming retention of title over
property in the company's possession. If there is insufficient space,
continuation sheets should be used and annexed hereto securely to the rest of
the form.
Name of creditor Address Amount Details of any security Date security Value of
or claimant (with postcode) Of debt held by creditor Given security
Flipfile Limited Unit 3, Oaktree Place 1,019.87
Matford Business Place
Exeter
Devon EX2 8WA
Silver Lynx Products Ltd Lynx House 6,501.83
10/11Amber Business Village
Amber Close
Tamworth, Staffs.
Illusion P.O. Box 481 5,549.12
Carshalton
Surrey SM5 2AB
Woolbro Distributors Ltd Prospect House 3,405.11
Victoria Road
Morley
Leeds LS27 9DB
Lambourne Limited Crossing Gates 3,674.23
Oaston Road
Nuneaton
Warwickshire CV11 6JX
Tollit & Harvey Ltd Old Meadow Road 4,148.37
Hardwick Industrial Estate
Kings Lynn
Norfolk
PE30 4LW
Signature /s/ Brian John Baylis Date 18/3/97
164
Name of creditor Address Amount Details of any security Date security Value of
or claimant (with postcode) Of debt held by creditor Given security
Gustav Botkai 21 Belfield Road 995.49
Didsbury
Manchester M20 0BJ
NES Arnold Limited Ludlow Hill Road 1,203.98
West Bridgford
Nottingham NG2 6HD
N Yeomans & Co Ltd Valley Road 5,811.94
Clacton on Sea
Essex CO15 4AG
Grandreams Ltd Jadwin House 5,236.80
205/211 Kentish Town Road
London NW5 2JU
Porth Innovations Ltd Caemawr Industrial Estate 14,471.68
Treorchy
Mid Glamorgan CF42 6EJ
Virgin Euro-
Magnetic Products Unit 5, Salbrook Road 4,304.08
Salfords
Redhill
Surrey RH1 5DY
Cathian Leather
Company Compstall Mills Estate 753.18
Andrew Street
Compstall
Stockport SK6 5HN
Signature /s/ Brian John Baylis Date 18/3/97
165
Name of creditor Address Amount Details of any security Date security Value of
or claimant (with postcode) Of debt held by creditor Given security
RMS International Ltd Unit 18, Orton Way -----
Hayward Industrial Park
Chester Road
Castle Bromwich
Birmingham
Prestige Balloon Co Ltd Unit B6 Mercia Way 9,701.06
Park Gram Road
Foxhills Industrial Estate
Scunthscope
DN15 8RE
David Halsall Plc Eastham House 28,766.18
Copse Road
Fleetwood
Lansc. FY7 7NY
Heritage Youngsley Ltd Heritage House 11,105.38
Unit 3 Marshgate Lane
London E15 2NG
Signature /s/ Brian John Baylis Date 18/3/97
166
THE STATIONERY COMPANY LTD
Minutes of a meeting of the Board of Directors
held on Monday 18th March 1995
Present Mr.B.J.Baylis
Mrs.S.A.M.Crisp
Mr.B.Pearson
Mr.M.Holland
In attendance Mrs. J.Lucas
1. BJB reminded the Board that under section 47 of the Insolvency Act 1986
that they were required to submit a Statement of Affairs of the Company. With
the agreement of the Receivers, a Statement had been prepared by Ian Mills
which to the best of our knowledge is a true and fair representation of the
Company's affairs as at 7th February 1996.
2. In the interests of expediency BJB had consulted Mr. Alan Pepper, The
Receivers representative who after in turn consulting their own legal advisers
confirmed that it would be in order for one member to swear the statement on
behalf of The Board.
3. IT WAS RESOLVED that the Statement of Affairs as prepared be adopted and
that BJB be instructed to Swear on behalf of the Board.
4. The being no other business, the meeting ended.
/s/ B.J.Baylis
B.J.Baylis
167
Arthur
Andersen
Arthur Andersen & Co. SC
29 March 1996 ___________________
18 Charlotte Square
Edinburgh EH2 4DF
0131 225 4554 Telephone
0131 226 3948 Facsimile
Direct Line 0131 469 6246
Our ref AHP/MM/CDL/U-1
Your Ref
TO ALL CREDITORS
Dear Sirs
CORNICHE DISTRIBUTION LTD
(IN ADMINISTRATIVE RECEIVERSHIP)
Following our appointment as joint Administrative Receivers of the above
company on 28 February 1996, we are required by Section 48(2) of the
Insolvency Act 1986 to call a meeting of the unsecured creditors of the
company. The purpose of the meeting is to formally present a report covering
the events leading up to our appointment and the progress of the
receivership. We enclose formal notice of that meeting along with a copy of
the report which will be presented.
Please note this meeting is being convened solely to comply with the
requirements of Section 48(2) of the Insolvency Act 1986. It is not for the
purpose of appointing a liquidator to the company nor is it a meeting which
the directors are required to attend. No information will be presented to the
meeting other than that contained in the report.
We enclose a form of proxy for your use in connection with this meeting.
Yours faithfully
/s/ Alan D Pepper
Alan D Pepper
for lain T Watters
Joint Administrative Receiver
168
NOTICE OF MEETING OF CREDITORS
CORNICHE DISTRIBUTION LTD
(IN ADMINISTRATIVE RECEIVERSHIP)
NOTICE IS HEREBY GIVEN, in pursuance of Section 48 of the Insolvency, Act
1986, that a meeting of the creditors of the above-named company will be held
at the Manchester Airport Hilton Hotel on Monday, the 15th of April 1996 at
1200pm for the purpose of having an account laid before them, showing the
events leading up to the appointment of the Joint Administrative Receivers,
the manner in which the administrative receivership has been conducted and the
property of the company disposed of, and of hearing any explanation that may
be given by the joint Administrative Receivers. A copy of the report is
enclosed with this notice.
Creditors whose claims are wholly secured are not entitled to attend or be
represented at the meeting.
A person is entitled to vote at the meeting only if
1. he has given to the Joint Administrative Receivers, not later than 12.00
hours on the business day before the day fixed for the meeting, details in
writing of the debt that he claims to be due to him from the company, and the
claim has been duly admitted.
2. there has been lodged with the Joint Administrative Receiver, any proxy
which the creditor intends to be used on his behalf.
DATED this 21st day of March 1996
/s/ Iain T Watters
Iain T Watters
Joint Administrative Receiver
169
Rule 8.1 Insolvency Act 1986 Form S.
Proxy (Administrative Receivership)
Notes to help completion
of the form
Please give full name and Name of Creditor____________________________________________
address for communication Address___________________________________________________
__________________________________________________________
__________________________________________________________
Please insert name of person Name of proxy-holder________________________________________
(who must be 18 or over) or __________________________________________________________
the "Chairman of the meeting". __________________________________________________________
If you wish to provide for __________________________________________________________
alternative proxy-holders in __________________________________________________________
the circumstances that your __________________________________________________________
first choice is unable to attend __________________________________________________________
please state the name(s) of __________________________________________________________
the alternatives as well __________________________________________________________
__________________________________________________________
__________________________________________________________
__________________________________________________________
__________________________________________________________
__________________________________________________________
__________________________________________________________
Please delete words in I appoint the above person to be my/the creditors proxy-holder at the
brackets if the proxy-holder meeting of creditors to be brackets if theproxy-holder held on - or at any
is only to vote as directed adjournment of that meeting. The proxy-holder is to purpose or vote as
he has no discretion instructed below (and in respect of any resolution for which no specific
instruction is given, may vote or abstain at his/her discretion)
__________________________________________________________
Voting instruction for resolutions
for the appointment of ________________________________________
of ________________________________________________________
representing _______________________________________________
as a member of the Creditors' committee
This form must be signed Signature_______________________ Date________________________
Name in CAPITAL LETTERS __________________________________
Only to be completed if the Position with creditor or relationship to creditor or other authority for signature
creditor has not signed
in person
__________________________________________________________
Remember: there may be resolutions on the other side of this form
FU 302.94
Issued 01/94
170
Arthur
Andersen
Arthur Andersen & Co. SC
29 March 1996 ___________________
18 Charlotte Square
Edinburgh EH2 4DF
0131 225 4554 Telephone
0131 226 3948 Facsimile
Direct Line 0131 469 6246
Our ref ADP/CDL/U-1 cc SE
TO ALL KNOWN CREDITORS
Your Ref
Dear Sirs
Corniche Distribution Limited (In Administrative Receivership) ("Corniche")
1. INTRODUCTION
1.1 I, lain T Watters and my partner, Gordon Christie of Arthur Andersen
were appointed Joint Administrative Receivers of Corniche Distribution Ltd
("the Company") by the Bank of Scotland ("the Bank") on 28 February 1996 under
the powers contained in a Debenture dated 7 April 1995.
As required by Section 48 of the Insolvency Act 1986, we now present our
report to the creditors. The remainder of the report is set out as follows:
2. Background to the Company
3. Events, so far as we are aware, leading to our appointment
4. Directors' Statement of Affairs
5. Carrying on of the Company's business and disposal of assets
6. Amounts due to security holders
7. Amounts payable to preferential creditors
8. Amounts likely to be available for the payment of a dividend
to other creditors
9. Directors' conduct
2. BACKGROUND TO THE COMPANY
2.1 The principal activity of the Company was that of a holding company
for its two trading subsidiaries, The Stationer), Company Limited and
Chessbourne International Limited, to which we were appointed Administrative
Receivers/Receivers prior to our appointment to Corniche. The Company
operated from an office in Wallington, Surrey and owned a property in Leek,
Staffordshire from which the subsidiaries operated.
171
TO ALL KNOWN CREDITORS 29 March 1996
2.2 The Company was incorporated on 30 March 1992 in order to exploit
opportunities in the retail stationery and allied business sectors. Corniche
subsequently acted as the holding company for two trading companies, The
Stationery Company Ltd, set up in September 1992 and Chessbourne International
Ltd, which became a subsidiary in October 1993. As a result of a reverse
takeover in March 1995, the directors, and sole shareholders, of the Company
became the majority shareholders in Corniche Group Inc., the Company's parent
which is registered in the USA and quoted on the NASDAQ securities market.
2.3 Latterly, the Company was a party to a conditional sale agreement for
the purchase of the shares of Kassel Ltd ("Kassel"), a small retail stationery
chain. The conditions were never fulfilled and the shareholders of Kassel
rescinded the agreement in January of this year.
2.4 The Directors holding, office during the period of 3 years prior to
our appointment, to the best of our knowledge, were as follows:-
Date of Appointment Date of Resignation
Brian J Baylis 22/04/92 -
Susan A M Crisp 22/04/92 -
2.5 The shareholders of the Company at the date of our appointment and at
the filing of the last accounts (27 March 1994) were as follows:-
Date of Appointment 27 March 1994
Brian J Baylis 80
Susan A M Crisp 20
Corniche Group Inc. 2,500,000
2.6 The following financial information has been extracted from the
accounts of the Company:-
Draft Management
Accounts for the Draft Accounts Audited accounts
24 weeks to for the year ended for the year ended
9 September 1995 25 March 1995 27 March 1994
£ £ £
Directors'
Remuneration Not Available 60,932 60,932
Fixed Assets 2,155,643 1,569,158 593,624
Current Assets 1,993,968 2,653,666 17,100
Creditors
and Provisions (1,674,722) (1,781,885) (446,156)
NET Assets 2,474,889 2,440,939 161,568
172
TO ALL KNOWN CREDITORS 29 March 1996
3. EVENTS, SO FAR AS WE ARE AWARE, LEADING TO OUR APPOINTMENT
3.1 The Company carried out no trading activities, its sole activity
being that of a holding company with its only material assets consisting of its
investments in the two subsidiaries, the property at Leek and amounts
receivable from its US parent company, Corniche Group Inc. ("CGI"). As a
result of the losses being made by its subsidiaries, the Company in turn had
incurred losses over a number of years.
3.2 With the appointment of Administrative Receivers/Receivers to the two
subsidiary companies it became obvious that the investments in these companies
were worthless and with their write down to nil value, combined with doubts as
to the recoverability of monies due from the parent company, the Company
became insolvent on a balance sheet basis. Furthermore, the Company no longer
had access to funding from its subsidiaries' operations and no other sources
of finance were available.
3.3 As a result, the directors requested the Bank to appoint
Administrative Receivers and, accordingly, we were appointed Joint
Administrative Receivers on 28 February 1996.
4. DIRECTORS' STATEMENT OF AFFAIRS
4.1 The Directors have complied with their responsibilities in accordance
with Section 47 of the Insolvency Act 1986 and ha ve provided us with a
Statement of Affairs of the Company in the prescribed form, which is
summarised in Appendix 1.
4.2 The following aspects of the Statement of Affairs prepared by the
Directors are, in our opinion, incorrectly stated:-
* The valuation of the property is based on a valuation carried out
in excess of one year ago. Our agents have valued the property at
£100,000
* The Statement of Affairs does not provide for the necessary costs
of preservation and realisation of the Company's assets.
* The figures stated for the banks' debt do not accord with the
claims received from the banks as disclosed in Section 6 below.
173
TO ALL KNOWN CREDITORS 29 March 1996
4.3 As a consequence of the above, the statement is inaccurate in
relation to dividend prospects for the various classes of creditors. At
present, notwithstanding that there are a number of substantial matters
remaining outstanding in this case , it is clear that there will be no funds
available to ordinary creditors.
5. CARRYING ON OF THE COMPANY'S BUSINESS AND DISPOSAL OF ASSETS
5.1 The Company's sole business was that of an intermediary holding
company and, with the business and assets of the subsidiary companies under
the control of Receivers/Administrative Receivers, no operational business
remained.
5.2 The sole substantive asset of the Company is a property located in
Leek, Staffordshire, over which Lloyds Bank plc holds a fixed charge. This
property was used as the operational base for both The Stationery Company Ltd
and Chessbourne International Ltd. With the cessation of the business of both
companies, the property is no longer in use and we are making efforts to sell
it.
5.3 As at the date of our appointment, the Company's records showed a
receivable from the US parent company, CGI of £1,990,112 in respect of a
contested share issue. The financial position of CGI is uncertain given that
it has no substantive assets other than its investments in the UK
subsidiaries. and accordingly we have agreed a settlement of £50,000 in
respect of the unpaid debt. This settlement figure was the subject of an
affirmative opinion by an independent accountant after analysis of CGI's most
recent balance sheet. There is unlikely to be any further recovery from this
source.
5.4 The remaining assets, including motor vehicles and furniture have
been disposed of.
6. AMOUNTS DUE TO SECURITY HOLDERS
6.1 Lloyds Bank plc holds a prior ranking fixed charge over the property
at Leek. The amount outstanding at the date of our appointment was
£92,464.
6.2 The amount due to Bank of Scotland plc at the date of our appointment
was as follows:-
Capital £194,635
Interest has continued to accrue on the outstanding balance since our
appointment and is covered under the Bank's Debenture.
174
TO ALL KNOWN CREDITORS 29 March 1996
7. AMOUNTS PAYABLE TO PREFERENTIAL CREDITORS
7.1 At the date of our appointment to the Company the preferential
creditors were estimated as follows:-
£
Inland Revenue - PAYE/NIC 51,501
H M Customs &- Excise - VAT 3,825
Employees 4,566
Total 59,892
7.2 Whilst Crown creditors have yet to lodge their formal preferential
claims, we are not aware at this stage of any reason why these should
significantly vary from the above.
8. AMOUNTS LIKELY TO BE AVAILABLE FOR THE PAYMENT OF A DIVIDEND TO OTHER
CREDITORS
8.1 Based on current estimates the prior ranking fixed charge holder will
be paid in full. It is clear, however, that there will be a shortfall as
regards the second fixed char-e holder. In addition there is no prospect
whatsoever of a dividend being available to preferential or ordinary
creditors.
8.2 Creditors should note that they may recover VAT on supplies made
after 1 April 1989 providing that the debt is over six months old and has been
fully written off in their accounts. Full details of the reclaim procedure are
available from HM Customs & Excise on request.
9. DIRECTORS' CONDUCT
9.1 In terms of the Directors Disqualification Act 1986, Receivers are
required to prepare a report on the conduct of those individuals who have been
directors, or shadow directors, of an insolvent company in the three year
period prior to their appointment. If any creditor is aware of any matters
which they believe should be brought to our attention in this regard, they
should supply details to us in writing.
Yours faithfully
/s/ Iain T Watters
lain T Watters
Joint Administrative Receiver
175
Corniche Distribution Ltd. (In Administrative Receivership) APPENDIX 1
Directors' Statement of Affairs as at 28 February 1996
BOOK ESTIMATED
VALUE TO REALISE
ASSETS SPECIFICALLY PLEDGED
Freehold Property 164,000 150,000
164,000 150,000
MORTGAGE HOLDER - LLOYDS BANK (86,162) (86,162)
SURPLUS/DEFICIT AS REGARDS MORTGAGE HOLDER 77,838 63,838
ASSETS SUBJECT TO FIXED CHARGE
Investment in Chessbourne International Limited 291,360 0
Investment in the Stationery Company Limited 1,000,000 0
Investment in Kassel Limited 9,597 0
Other debtors and prepayments 22,432 0
Amount due from Corniche Group, Inc. 1,990,112 0
3,313,501 0
FIXED CHARGE HOLDER - BANK OF SCOTLAND (191,936) (63,838)
SURPLUS AS REGARDS FIXED CHARGE HOLDER 3,199,403 0
ASSETS SUBJECT TO FLOATING CHARGE
Plant, machinery & equipment 8,800 2,000
Motor vehicles 718 8,000
9,518 10,000
AVAILABLE TO PREFERENTIAL CREDITORS 3,253,609 10,000
PREFERENTIAL CREDITORS
Inland Revenue (51,501) (51,501)
HMC&E (3,825) (3,825)
Employees (4,566) (4,566)
(59,892) (59,892)
AVAILABLE TO FLOATING CHARGE HOLDER 3,193,717 (49,892)
FLOATING CHARGE HOLDER - BANK OF SCOTLAND (128,098)
AVAILABLE TO UNSECURED CREDITORS 3,193,717 (177,990)
UNSECURED CREDITORS (1,544,206)(1,544,206)
DEFICIT AS REGARDS UNSECURED CREDITORS 1,649,511 (1,721,196)
176
Arthur
Andersen
Arthur Andersen & Co. SC
7 May 1996 ___________________
18 Charlotte Square
Edinburgh EH2 4DF
0131 225 4554 Telephone
0131 226 3948 Facsimile
Direct Line 0131 469 6246
Our ref ADP/CDL/U-1 cc SE
TO ALL KNOWN CREDITORS
Your Ref
Dear Sirs
Corniche Distribution Limited (In Administrative Receivership)
1. Meeting of Creditors
In accordance with Section 48 of the Insolvency Act 1986 a meeting of
Creditors of the above Company was held at the Manchester Airport Hilton
Hotel in Manchester on 15 April 1996.
2. Committee of Creditors
The Creditors present at the meeting decided not to elect a Committee of
Creditors.
3. VAT Bad Debt Relief
I refer to Section 8.2 of the Creditors Report previously circulated
regarding the recovery of VAT on bad debts.
Yours faithfully
/s/ Iain T Watters
Iain T Watters
Joint Administrative Receiver
177
Arthur
Andersen
Arthur Andersen & Co. SC
29 March 1996 ___________________
18 Charlotte Square
Edinburgh EH2 4DF
0131 225 4554 Telephone
0131 226 3948 Facsimile
Direct Line 0131 469 6246
Our ref ADP/SCL/U-1 cc SE
TO ALL KNOWN CREDITORS
Your Ref
Dear Sirs
The Stationery Company Limited (In Administrative Receivership) ('SCL')
1. INTRODUCTION
1.1 I, Iain T Watters and my partner, Gordon Christie, of Arthur
Andersen were appointed Joint Receivers of The Stationery Company Limited (the
Company') by the Bank of Scotland ("the Bank") on 7 February 1996 under powers
contained in a Debenture dated 16 November 1993.
1.2 As required by Section 48 of the Insolvency Act 1986, we now present
our report to the creditors. The reminder of the report is set out as
follows:-
2. Background to the Company;
3. Events, so far as we are aware, leading to our appointment
4. Directors' Statement of Affairs;
5. Carrying on of the company's business and disposal of assets;
6. Amounts due to the Debenture Holder,
7. Amounts due to preferential creditors,
8. Amounts likely to be available for the payment of a dividend to
other creditors;
9. Directors' conduct.
2. BACKGROUND TO THE COMPANY
2.1 The Stationery Company Limited was incorporated on 15 July 1992 with
its principal activity being the retail sale of stationery products. The
Company's strategy was for growth through acquisition and it subsequently
acquired the businesses of two smaller retail stationery chains, Memo and
Stationery Plus. Ultimately it operated from 22 leased retail sites spread
throughout England and had its head office and warehouse in lease premises in
Leek, Staffordshire.
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TO ALL KNOWN CREDITORS 29 March 1996
2.2 The Directors holding office during the period of 3 years prior to our
appointment, to the best of our knowledge, were as follows:-
Date of Appointment Date of Resignation
Julie P Lucas 23/11/94 08/01/96
Brian J Baylis 16/09/92 -
Susan A M Crisp 16/09/92 -
Bruce Pearson 01/01/94 -
Martin Holland 23/11/94 -
2.3 No directors had an interest in shareholdings in the Company, except as
nominee. The shareholders at the date of our appointment were:-
Shareholding
Corniche Distribution Ltd 999,999
Corniche Distribution Ltd &
Brian J Baylis 1
2.4 The following financial information has been extracted from the accounts
of the Company:-
Management Accounts Draft Accounts Audited Accounts
for 32 Weeks to for the year ended for the year ended
3 November 1995 25 March 1995 27 March 1994
£ £ £
Turnover 3,150,372 4,234,117 346,816
Profit/(Loss)
before Tax (956,394) (373,112) (206,590)
Directors'
Remuneration Not available 47,344 27,925
Fixed Assets 659,592 709,117 692,626
Current Assets 3,561,999 2,682,592 776,690
Creditors and
Provisions (4,076,547) (2,539,599) (924,557)
Net Assets/
(Liabilities) 145,044 85,110 544,752
179
TO ALL KNOWN CREDITORS 29 March 1996
3. EVENTS, SO FAR AS WE ARE AWARE, LEADING TO OUR APPOINTMENT
3.1 The Company had encountered trading difficulties for some considerable
time and was suffering significant cash flow difficulties partly as a result
of non payment of a debt due from an associated company, Kassel Ltd. As a
result of these difficulties the Company was unable to stock its retail units
to an appropriate level and accordingly, sales declined to the extent that
many of the retail units, except for peak sales periods, could not generate
sufficient funds to cover local fixed overheads. As a result, and as
indicated above, the Company incurred significant trading losses in the period
to 3 November 1995.
3.2 It Is our understanding that from October 1995 the Directors attempted
to refinance the Company with a view to ensuring the survival of the
business. In this regard, the Directors held discussions with the Board of
the ultimate parent company, Corniche Group Inc., a company registered in the
USA, along with that company's investment bankers. Unfortunately, funds were
not forthcoming from this source and the Bank was not willing to advance any
further funds based on their existing security.
3.3 In the absence of any other sources of funding and in the face of
mounting pressure from creditors, the Directors were forced to request the
Bank to appoint A Administrative Receivers under the terms of its Debenture.
Accordingly, we were appointed Joint Administrative Receivers on 7 February
1996.
4. DIRECTORS' STATEMENT OF AFFAIRS
4.1 The Directors have complied with their responsibilities under Section
47 of the Insolvency Act, 1986, and provided us with a Statement of Affairs of
the Company in the prescribed form which is summarised in Appendix 1.
4.2 The following aspects of the Statement of Affairs prepared by the
Directors are, in our opinion, incorrectly stated:-
* Leasehold assets are significantly overvalued at book value due to
the inclusion of a number of shops recently purchased at values
significantly in excess of the assets assumed. In addition, the
value of the assets includes large capital costs which are coverable.
This has resulted in a significant overstatement in the reasonable
value of leasehold assets.
180
TO ALL KNOWN CREDITORS 29 March 1996
* The reasonable value of stock is shown as nil. As noted below, our
subsequent sale of the business included the sale of the Company's
stationery stock from both the stores and the Company's warehouse
at a reasonable discount on cost.
* Trade debtors assumes a substantial recovery from the previously
associated company, Kassel Ltd which we consider unlikely, after a
review of that company's recent financial statements.
* The Statement of Affairs does not provide for the necessary costs
of preservation and realisation of the Company's assets including
specifically substantial costs associated with the sale of the
business.
4.3 As a consequence of the above, the statement is inaccurate in relation
to dividend prospects for the various classes of creditors. At present,
notwithstanding that there are a number of substantial matters remaining
outstanding in this case, there is little likelihood that there will be funds
available to ordinary creditors.
5. CARRYING ON THE COMPANY'S BUSINESS AND DISPOSAL OF ASSETS
5.1 Immediately on appointment and because of the time constraints that
existed in order to maintain the goodwill and viability of the business and
thus the value of the Company's assets, we entered into negotiations with a
third party who had expressed an interest in purchasing the business prior to
our appointment. It became readily apparent that concluding this agreement
would be in the interests of the creditors as it was at a value far higher
than would have been anticipated had we been required to trade the business
and to enter into negotiations with a number of parties. A quick sale also
precluded the associated costs of trading the business over an extended
period. Accordingly, the business and assets of 18 of the Company's 22
remaining operational stores were sold to Stationery Box Ltd with effect from
the date of our appointment along with all of the Company's stock.
5.2 As stated above, the bulk of the business and assets of the Company
were sold to Stationery Box Ltd. We were advised by our agents that the
remaining leased retail units had no market value and we are currently in the
process of surrendering these leases to the respective landlords.
5.3 There have been a number of other minor realisations including the
sale of plant, machinery and equipment and the recovery of some small
outstanding debts.
181
TO ALL KNOWN CREDITORS 29 March 1996
6. AMOUNTS DUE TO THE DEBENTURE HOLDER
6.1 The amount due to the Bank of Scotland plc at the date of our
appointment was as follows:-
Overdraft £ 234,117
Interest has continued to accrue on the outstanding balance
since our appointment and is covered under the Bank's Debenture.
7. AMOUNTS DUE TO PREFERENTIAL CREDITORS
7.1 At the date of our appointment to the Company the preferential
creditors were estimated as follows:-
£
Inland Revenue - PAYE/NIC 120,639
H M Customs & Excise - VAT 165,099
Employees 100,475
Pension Scheme 322
TOTAL 38,535
7.2 Whilst Crown creditors have yet to lodge their formal preferential claims,
we are not at this stage aware of any reason why these should significantly
vary from the above.
8. AMOUNTS LIKELY TO BE AVAILABLE FOR THE PAYMENT OF A DIVIDEND TO OTHER
CREDITORS
8.1 Based on current estimates it is clear that the Fixed Charge holder
will be paid In full. It is likely, however, that there will be a significant
shortfall to the preferential creditors, Accordingly, there is little
likelihood of a dividend being available to ordinary creditors.
8.2 Creditors should note however, that they may recover VAT on supplies
made after 1 April 1989 providing that the debt is over six months old and has
been fully written off in their accounts. Full details of the VAT reclaim
procedure are available from HM Customs & Excise on request.
182
TO ALL KNOWN CREDITORS 29 March 1996
9. DIRECTORS' CONDUCT
9.1 In terms of the Directors Disqualification Act 1986, Receivers are
required to prepare a report on the conduct of those individuals who have been
Directors, or Shadow Director, of an insolvent company in the three year
period prior to their appointment. If any creditor is aware of any matters
which they believe should be brought to our attention in this regard, they
should supply details to us in writing.
Your faithfully
/s/ Iain T Watters
lain T Watters
Joint Administrative Receiver
183
The Stationery Company Ltd (In Administrative Receivership) Appendix 1
Directors' Statement of Affairs as at 7 February 1996
ESTIMATED
BOOK VALUE TO REALISE
ASSETS SUBJECT TO FIXED CHARGE
Freehold 18,656 0
Leasehold Assets 800,573 500,000
Fixtures & Fitting 344,902 0
Plant & Equipment 5,530 0
Trademarks 1,177 0
Stocks 348,300 0
Trade Debtors 1,394,106 155,000
Other debtors 311,560 15,000
Amounts due from Group Companies 52,175 0
3,266,979 670,000
AVAILABLE TO FIXED CHARGE HOLDER 3,266,979 670,000
FIXED CHARGE HOLDER - BANK OF SCOTLAND (233,170) (233,170)
SURPLUS/(DEFICIT) AS REGARDS FIXED CHARGE HOLDER 3,033,809 436,830
ASSETS NOT SPECIFICALLY PLEDGED
New store set up cost 17,585 0
AVAILABLE TO PREFERENTIAL CREDITORS 3,051,394 436,830
PREFERENTIAL CREDITORS
Inland Revenue (120,639) (120,639)
HMC&E (165,099) (165,099)
Employees (100,475) (100,475)
Pension Scheme (322) (322)
(368,535) (386,535)
AVAILABLE TO UNSECURED CREDITORS 2,644,859 50,249
UNSECURED CREDITORS (3,091,628) (3,091,628)
DEFICIT AS REGARDS TO UNSECURED CREDITORS
(426,769) (3,041,333)
184
Arthur
Andersen
Arthur Andersen & Co. SC
29 March 1996 ___________________
18 Charlotte Square
Edinburgh EH2 4DF
0131 225 4554 Telephone
0131 226 3948 Facsimile
Direct Line 0131 469 6246
Our ref ADP/CHE/U-1 cc SE
TO ALL KNOWN CREDITORS
Your Ref
Dear Sirs
Chessbourne International Limited (In Receivership)
1. INTRODUCTION
1.1 I, lain T Watters and my partner, Gordon Christie, of Arthur Andersen
were appointed joint Receivers of Chessbourne International Limited ('the
Company") by the Bank of Scotland (the Bank) on 7 February 1996 under the
powers contained in a Floating Charge dated 27 March 1987.
As required by Section 67 of the Insolvency Act 1996, we now present our
report to the creditors. The remainder of the report is set out as follows:-
2. Background to the Company
3. Events, so far as we are aware, leading to our appointment
4. Directors' Statement of Affairs
5. Carrying on of the Company's business and disposal of assets
6. Amounts due to the Floating Charge Holder
7. Amounts payable to preferential creditors
8. Amounts likely to be available for the payment of a dividend to
other creditors
9. Directors' conduct
2. BACKGROUND TO THE COMPANY
2.1 The Company was incorporated on 22 January 1987 as Hope Sixteen (No.
105) Ltd in order to acquire the wholesale stationery business of the Okhai
Group in a management buyout. It subsequently became it subsidiary of Corniche
Distribution Limited in October 1993.
185
TO ALL KNOWN CREDITORS 29 March 1996
2.1 The principal activity of the Company continued to be the wholesale of
stationery products, ultimately operating from premises in Leek,
Staffordshire; Wallington, Surrey and third party warehouse facilities in
Stanton, Essex.
2.2 The Directors holding office during the period of 3 years prior to our
appointment, to the best of our knowledge, were as follows:-
Date of Appointment Date of Resignation
Martin Holland 12/03/87 -
Brian J Baylis 20/07/92 -
Susan A M Crisp 07/10/93 -
David A Crisp 07/10/93 28/04/95
David D Ferguson 01/04/95 01/12/95
Karen Sparkes 16/12/94 -
Alan Barclay 26/06/91 08/10/93
David A Walker 12/03/87 15/10/93
Bruce Linton 12/03/87 06/05/94
Alasdair MacCallum 01/05/87 06/05/94
2.3 Shareholders as at the date of our appointment were as follows:
Ordinary "B" Ordinary CRPS
Ash Ltd 186,138 14,737
Bank of Scotland plc 675,000 75,000
Corniche Distribution Ltd 127,500 186,138 14,737
Dundee Property Company Ltd 199,750 9,164
Martin Holland 17,794 412
Bruce Linton 10,774 666
Ronatree Ltd 122,500
David Walker 10,774 666
Total 250,000 1,286,386 115,382
186
TO ALL KNOWN CREDITORS 29 March 1996
2.4 The following financial information has been extracted from the
accounts of the Company:-
Draft Accounts for
Management Accounts the 15 months Audited Accounts
for 32 Weeks to ended for the year ended
3 November 1995 26 March 1995 27 March 1993
£ £ £
Turnover 3,587,669 11,202,955 10,960,640
Profit/(Loss)
before Tax (804,378) (443,609) (5,453)
Directors'
Remuneration 216,466 22,855 136,724
Fixed Assets 106,347 152,770 97,315
Current Assets 3,008,179 4,000,750 3,743,437
Creditors and
Provisions (4,370,378) (4,590,961) (3,834,584)
Net Assets/
(Liabilities) (1,255,852) (437,441) (6,168)
3. EVENTS, SO FAR AS WE ARE AWARE, LEADING TO OUR APPOINTMENT
3.1 The Company had encountered trading difficulties for some considerable
time, primarily as a result of large intercompany sales to its sister company,
The Stationery Company Limited and to an associated company, Kassel Ltd for
which payment had not been received. Consequently the Company's records at
the date of our appointment showed debts due from The Stationery Company Ltd
of £1,281,515 and Kassel Ltd of £147,357. As a consequence of the
cash flow ties caused, the Company was unable to source an appropriate level
and range of stock from its suppliers and this was reflected in a marked
reduction in turnover as demonstrated in the historical financial information
shown above.
3.2 It is our understanding that in the period from October 1995 until our
appointment the Directors had been seeking to conclude a refinancing agreement
which would have resulted in the survival of the business. However, the
parties involved in these discussions, being Corniche Group Inc., the
Company's ultimate parent and that company's investment bankers failed to
agree a rescue package and the Directors were thus forced, due to the lack of
alternative sources of funding, to request the bank to
187
TO ALL KNOWN CREDITORS 29 March 1996
appoint Receivers under the terms of their Floating Charge. Accordingly, we
were appointed Joint Receivers on 7 February 1996.
4. DIRECTORS' STATEMENT OF AFFAIRS
4.1 The Directors have complied with their responsibilities in accordance
with Section 66 of the Insolvency Act 1986 and provided us with a Statement of
Affairs of the Company In the prescribed form, which is summarised in Appendix
1.
4.2 The following aspects of the Statement of Affairs prepared by the
Directors are, in our opinion, incorrectly stated:-
* Trade Debtors includes items which were intended to be written off
in the Company's accounts and are irrecoverable. The book value shown
also includes the debt due from Kassel which, as noted below in para
5.5, is unlikely to be recovered.
* Stock held at the date of our appointment was of poor quality and
consisted mainly of old, non-marketable lines of which there were bulk
quantities. Accordingly the amount recoverable from the disposal of this
stock will be considerably less than that shown in the Statement of
Affairs.Furthermore, as shown below, our estimate of the book value
of this stock varies from that incorporated in the Statement of Affairs.
* HM Customs & Excise have submitted a preferential claim amounting
to £39,489, approximately £20,000 greater than that shown
on the Statement of Affairs.
4.3 As a consequence of the above, the statement is inaccurate in relation
to dividend prospects for the various classes of creditors. At present,
notwithstanding that there are a number of substantial matters remaining
outstanding in this case, it is clear that there will be no funds available to
ordinary creditors.
5. CARRYING ON OF THE COMPANY'S BUSINESS AND DISPOSAL OF ASSETS
5.1 As noted above, the Company's business had been eroded to such an
extent that no viable business remained. Nevertheless, we contacted it number
of parties in the stationery business with a view to selling the remaining
business and assets as a going concern. Unfortunately, no interest was
forthcoming and we have had no option but to carry on limited trading by way
of stock disposal in order to preserve the value of the assets.
188
TO ALL KNOWN CREDITORS 29 March 1996
5.2 Approximately £550,000 (at cost) of stationery stock was located
at the Company's third party warehouser McGregor Cory, at the date of our
appointment. At that date McGregor Cory were owed £38,134 in respect of
unpaid storage and distribution charges and under the terms of the National
Association of Warehousers Conditions of Contract had exercised a valid lien
over the goods contained in the warehouse. We were forced to agree a
settlement prior to being able to dispose of the stock. In addition one
supplier, Farfalla Trading Ltd, held a valid retention of title claim over
£1 18,500 worth of stock (this is disclosed in the Directors' Statement
of Affairs as it specifically asset with a book value of £189,591 which
does not accord with our valuation; the Statement of Affairs also discloses as
specifically secured a trade debtor of £7,170 due to Farfalla on which
we are currently taking legal advice). There was no equity in this stock and
accordingly it was returned to Farfalla. The bulk of the remainder of the
stationery stock has now been disposed of and we are currently exploring
avenues for the disposal of the final stock items.
5.3 A small quantity of furniture held at the Company's leased warehouse
in Bailleston, Glasgow has also been disposed of.
5.4 The vast bulk of the debts due at the date of our appointment related
to The Stationery Company Ltd and Kassel Ltd. We were also appointed Joint
Administrative Receivers of The Stationery Company Ltd on 7 February 1996, and
our initial investigations have shown that there is little prospect of a
dividend from that company in respect of the debt due.
5.5 Kassel Ltd was managed by The Stationery Company Ltd under a
management agreement which was treated by the directors of Kassel on or about
the middle of January 1996. The Company's records at the date of our
appointment showed a receivable of £147,297 from Kassel; however, our
investigations have shown that Kassel is currently in an uncertain financial
position and accordingly it is our opinion that there is little prospect of a
recovery in that area.
5.6 Third party debtors at the date of our appointment amounted to
£220,523 consisting of 170 accounts. The Company had, however, failed
to process a number of adjustments amounting to £124,388 of debt which
had been identified to be written off. Accordingly, the maximum amount
recoverable would be £96,135, We are aggressively attempting to recover
this money, however, the very nature of the debts (small amounts owed by small
Companies) prohibits costly recovery action being taken. Accordingly, we do
not expect to recover more than £66,600 from this area.
189
TO ALL KNOWN CREDITORS 29 March 1996
6. AMOUNTS DUE TO THE FLOATING CHARGE HOLDER
6.1 The amount due to Bank of Scotland plc at the date of our
appointment was as follows--
Term Loan £2,063,440
Overdraft 1,063,259
Wages Account 72,794
Total £3,199,493
Interest has continued to accrue on the outstanding balance since our
appointment and is covered under the Bank's Floating Charge.
7. AMOUNTS PAYABLE TO PREFERENTIAL CREDITORS
7.1 At the date of our appointment to the Company the Directors estimated
the preferential creditors as follows:-
£
Inland Revenue - PAYE 91,890
H M Customs & Excise - VAT 19,712
Employees 19,712
Pension Scheme 2,612
Total £133,926
7.2 While all Crown creditors have yet to lodge their formal preferential
claims, with the exception of HM Customs & Excise who, as noted at para 4.2
have lodged a claim in excess of that shown, we are not aware at this stage of
any reason why any of the other balances should significantly vary from the
above.
8. AMOUNTS LIKELY TO BE AVAILABLE FOR THE PAYMENTS OF A DIVIDEND
TO OTHER CREDITORS
8.1 Based on current estimates it is clear that whilst preferential
creditors are likely to be paid in full there will be a substantial shortfall
to the Floating Charge holder. Accordingly, there is no prospect whatever of
a dividend being available to ordinary creditors.
8.2 Creditors should note that they may recover VAT on supplies made after
1 April 1989 providing that the debt is over six months old and has been fully
written off in their accounts. Full details on the reclaim procedure are
available from HM Customs & Excise an request.
190
TO ALL KNOWN CREDITORS 29 March 1996
9. DIRECTORS' CONDUCT
9.1 In terms of the Directors Disqualification Act of 1986, Receivers are
required to prepare a report on the conduct of those individuals who have been
directors, or shadow directors, of an insolvent company in the three year
period prior to their appointment. If any creditor is aware of any matter
which they believe should be brought to our attention in this regard, they
should supply details to us in writing.
Yours faithfully
/s/ lain T Watters
lain T Watters
Joint Receiver
191
Chessbourne International Ltd (In Receivership) Appendix 1
Directors' Statement of Affairs as at 7 February 1996
ESTIMATED
BOOK VALUE TO REALISE
ASSETS SPECIFICALLY SECURED
Stock 189,591 198,591
Trade Debtors 7,170 7,170
196,761 196,761
AMOUNTS DUE TO SECURITY HOLDER (196,761) (196,761)
SURPLUS AS REGARDS SPECIFIC SECURITY HOLDER 0 0
ASSETS SUBJECT TO FLOATING CHARGE
Trade Debtors 333,139 136,000
Loans and Advances 1,428,872 0
Stock 659,343 400,000
Other debtors and prepayments 111,359 8,800
Leasehold Property 241 0
Plant, Machinery and vehicles 92,258 15,000
2,625,212 559,800
AVAILABLE TO PREFERENTIAL CREDITORS 2,625,212 559,800
PREFERENTIAL CREDITORS
Inland Revenue (91,890) (91,890)
HMC&E (19,712) (19,712)
Employees (19,912) (19,712)
Pension Scheme (2,612) (2,612)
(133,926) (133,926)
AVAILABLE TO FLOATING CHARGE HOLDER 2,491,286 425,874
FLOATING CHARGE HOLDER - BANK OF SCOTLAND (3,155,635) (3,155,635)
DEFICIT AS REGARDS FLOATING CHARGE HOLDER (664,349) (2,729,761)
UNSECURED CREDITORS (885,839) (885,839)
DEFICIT AS REGARDS UNSECURED CREDITORS (1,550,188) (3,615,600)
193
MUTUAL RELEASE
KNOW ALL MEN BY THESE PRESENTS:
That Whereas:
A. Corniche Group Incorporated, a Delaware corporation ("CGI")
borrowed UK£50,000 from The Bank of Scotland (the "Bank") and in
consideration therefor issued to the Bank CGI's promissory note dated in
February 1996 (the "Note") providing for, among other things, maturity in
August 1996 and an annual rate of interest calculated at 2% above the 3-month
London Interbank Offered Rate ('LIBOR") ascertained at specified times; and
B. The Bank advised CGI that it would accept in full satisfaction and
discharge of all principal, accrued interest and any and all others sums which
may be due under the Note the sum of US$ 89,374.49, payable in lawful money
of the United States and in same day funds on the date hereof; and
C. CGI has this day made payment herewith to the Bank of the amount
set forth in Preamble B above, in accordance with the terms specified therein,
and in full satisfaction and discharge of the obligations specified therein.
Now, Therefor:
CORNICHE GROUP INCORPORATED
JAMES FYFE
(the said corporation and individuals,
together with their respective
executors, administrators, successors and
assigns collectively jointly, and severally
the "CGI Group")
and
THE GOVERNOR AND COMPANY OF
THE BANK OF SCOTLAND
(the said corporation together with its
successors and assigns, collectively,
jointly, and severally the "Bank Group")
for good and valuable consideration, the receipt of which is acknowledged each
from the other, have entered into the agreements of release set forth below.
193
1. The CGI Group and each and every one of them respectively do, by
these presents, remise, release and forever discharge the Bank Group and each
and every one of them from all liabilities, accounts, causes of action, sums
of money, reckonings, contracts, controversies, agreements, damages,
judgments, executions, claims, demands, debts, obligations, promises,
covenants, actions and undertakings, in law or in equity, which against the
Bank Group and each and every one of them the CGI Group and each and every one
of them ever had, now have or hereafter can, shall or may have, for or by
reason of any matter, cause or thing whatsoever, up to and through the date
hereof.
2. The Bank Group and each and every one of them respectively do, by
these presents, remise, release and forever discharge the CGI Group and each
and every one of them from all liabilities, accounts, causes of action, sums
of money, reckonings, contracts, controversies, agreements, damages,
judgments, executions, claims, demands, debts, obligations, promises,
covenants, actions and undertakings, in law or in equity, which against the
CGI Group and each and every one of them the Bank Group and each and every one
of them ever had, now have or hereafter can, shall or may have, for or by
reason of any matter, cause or thing whatsoever, up to and through the date
hereof.
3. In the event the payment to the Bank referred to in Preamble B
must be returned, repaid or disgorged to the CGI Group, a trustee or any other
person, in whole or in part, Sections 1 and 2 hereof shall be null and void
and of no force or effect.
In Witness Whereof, the parties have caused these presents to be executed
by the following persons thereunto duly authorized as of January 30, 1997.
CORNICHE GROUP INCORPORATED
By: /s/ James Fyfe
JAMES FYFE, Vice President
/s/ James Fyfe
JAMES FYFE
THE GOVERNOR AND COMPANY OF
THE BANK OF SCOTLAND
By /s/ John Kelly
194
AGREEMENT
among
CORNICHE GROUP INCORPORATED
CORNICHE DISTRIBUTION LIMITED
(IN ADMINISTRATIVE RECEIVERSHIP)
and
THE RECEIVERS THEREOF
Dorman Jeffrey & Co
Solicitors
Glasgow
4/AGG.159/ym
195
INDEX
Clause Heading Page
Parties 1
Preambles 1
1. Interpretation
2. Conditions Predent
3. Completion
4. Settlement of the Claim
5. Receivers
6. Exclusion of Representation and Warranties
7. Costs
8. Claims by CGI
9. Notice
10. Entire Agreement
11. Transferability
12. Spirit, Aims and intent
13. Severability
14. Waivers
15. Announcement
16. Lex Loci and jurisdiction
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AN AGREEMENT made the 4th day of March 1996 AMONG,
1. CORNICHE GROUP INCORPORATED, a corporation organized under the laws of
the State of Delaware (hereinafter called "CGI") of Wayne Interchange Plaza 1,
145 Route 46 West, Wayne, NJ 07470
2. CORNICHE DISTRIBUTION LIMITED (IN ADMINISTRATIVE RECEIVERSHIP), a
company incorporated under the Companies Act (no. 2701498) and having its
Registered Office at 272 London Road, Wallington, Surrey, SM6 7DJ (hereinafter
called "CDL") acting through its joint Receivers, IAIN THOMAS WATTER and
GORDON CHRISTIE both of 18 Charlotte Square, Edinburgh, both Chartered
Accountants and partners of Arthur Andersen, appointed by virtue of an
instrument of appointment by the Bank (as hereinafter defined) dated 28
February 1996 pursuant to a Debenture in favour of the Bank by CDL dated 7
April 1995 and registered 12 April 1995 (hereinafter together called "the
Receivers")
and
3. THE RECEIVERS, in their capacity as Receivers of CDL.
WHEREAS:
(1) CDL is in Administrative Receivership and has agreed to discharge the CDL
Claims (as hereinafter defined) in consideration of the Settlement Sum (as
hereinafter defined); and
(2) In consideration of CDL discharging the CDL Claims (as hereinafter
defined), CGI has agreed to discharge the CGI claim (as hereinafter defined).
NOW THEREFORE THE PARTIES HERETO HEREBY CONTRACT AND DO HEREBY AGREE as
follows:
1. INTERPRETATION
1.1 In this Agreement the following words, phrases, team and expressions shall
bear the followings meanings:
"Bank" means the Governor and Company of the Bank of Scotland
"Business Day" means a day other than a Saturday or Sunday on which the Bank
is open for business both in Glasgow and London.
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"CDL Claims' means all and any claims competent to CDL against CGI in
connection with the Shares.
"CGI Claims" means all and any claims competent to CGI against CDL of
whatsoever nature and howsoever arising including but not limited to the CGI
inter company account.
"Completion" means completion in terms of this Agreement.
"Completion Date" means the date of this Agreement.
"Receivers' Bank" means the client account of the Receivers' Solicitors held
at the Bank, Account Number 00300805, Sort Code 80-07-48.
"Receivers' Solicitors" means Dorman Jeffrey & Co., Solicitors, Glasgow and
Edinburgh.
"Settlement Sum" means the sum of FIFTY THOUSAND POUND (£50,000)
STERLING.
"Shares" means 2,499,900 shares of £1 each in the capital of CDL, which
prior to the date hereof were allotted or alleged to have been allotted to
CGI.
1.2 The provisions of the Interpretation Act 1978 with respect to the
interpretation and Construction of this Agreement shall apply mutatis
mutandis.
1.3 References to Clauses, unless the contrary intention appears, are to the
Clauses of this Agreement.
1.4 The headings contained herein are for convenience only and shall not be
construed as forming part of this Agreement or be taken into account in the
interpretation hereof.
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1.5 This Agreement may be executed in any number of counterparts and all such
counterparts taken together shall be deemed to constitute one and the same
document.
2. CONDITIONS PRECEDENT
2.1 This Agreement is conditional in all respect upon the following conditions
having been implemented in full:
2.1.1 The Receiver having received from Baker Tilly a letter (addressed to
the Receiver) setting out details as to the current financial Position of CGI,
the terms of which (in the opinion of the Receiver) are satisfactory to the
Receivers; and
2.1.2 The Receivers having received from the Board of CGI a letter
(addressed to the Receivers) setting out details as to the basis of CGI
disputing the CDL Claims, the terms of which (in the opinion of the Receivers)
are satisfactory to the Receivers, and which makes reference to the letter
referred to in Clause 2.1.1 above.
2.2 The conditions precedent contained in Clause 2.1 hereof are for the sole
and exclusive benefit of the Receivers and may only be waived by the
Receivers.
3. COMPLETION
3.1 The Settlement Sum shall be paid to CDL on the Completion Date by CGI by
way of telegraphic transfer to the Receivers' Bank Account or otherwise as
agreed by the Parties.
3.2 The provisions of Clause 4 shall only come into force and have effect upon
the provisions of Clause 2 and Clause 3.1 both having been implemented in
full.
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4. SETTLEMENT OF THE CLAIMS
4.1 In consideration of the Settlement Sum CDL, hereby irrevocably and
unconditionally discharges the CDL Claims.
4.2 In consideration of CDL discharging CDL Claims, CGI hereby irrevocably and
unconditionally discharges the CGI Claims.
5. RECEIVERS
5.1 It is essential condition of this Agreement:
5.1.1 that the Receivers contract solely as agents of CDL and shall incur
no personal liability of whatsoever nature (whether directly or indirectly,
express or implied) and howsoever arising including without prejudice to the
foregoing generate, personal liability in respect of any action or actions of
whatsoever nature and howsoever arising in pursuance respectively of CDL's
rights and/or obligations under this Agreement and whether such claim is
formulated in contract and/or tort or by reference to any other remedy or
right and in whatever jurisdiction or forum;
5.1.2 that no claim which may be or become competent to CGI arising
directly or indirectly from this (or under any deed or other document executed
in consequence of hereof or on or under any associated or collateral agreement
or arrangement) will lie against the Receivers personally and the Receivers
shall be entitled at any time to have any claims, documents or others amended
to include an exclusion of personal liability in terms of this Clause 5;
5.1.3 that any personal liability of the Receivers which would in terms of
the Insolvency Act 1986 arise but for the provisions of this Clause 5 is
hereby expressly excluded,
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5.2 Nothing in this Agreement shall constitute a waiver of any right of the
Receiver to be indemnified by, or to exercise a lien, whether under the provisio
n of the Insolvency Act 1986 or otherwise howsoever.
5.3 The Receivers have joined in as parties to this Agreement solely for the
purpose of obtaining the benefit of the provisions of Clause 2 and this Clause
5 and any other provisions in this Agreement in their favour.
5.4 For the purpose of this Agreement references to "the Receivers" where the
context so permits shall mean and include their present and future firm or
firms, partners and employees, and any legal entity or partnership using in
its name the words "Arthur Andersen" and the partners, shareholders, officers
and employees of any such entity or partnership.
6. EXCLUSION OF REPRESENTATIONS AND WARRANTIES
CGI agrees that in entering into this Agreement it is not relying upon any
information, warranty, statement, representation or silence on the part of the
Receivers or the Receivers' Solicitors and that CGI is not relying upon any
other written or oral representation made to it or to its representatives or
agents by the by the Receivers or their representatives or agents.
7. COSTS
Each party shall be responsible for its own legal costs in connection with the
negotiation, preparation, execution and delivery of this Agreement and all
documents and instruments executed pursuant to this Agreement.
8. CLAIMS BY CGI
8.1 Any claim by CGI whether arising pursuant to this Agreement or otherwise
shall be against CDL and not the Receivers; and then shall only be an
unsecured claim against CDL.
8 2 Any claim by against CDL and/or the Receivers whether arising pursuant to
this agreement or otherwise shall be irrevocably waived unless made in writing
by notice by CGI to the Receivers not later than one month after the
Completion Date, the first day of such one month period to be the Completion
Date, time being of the essence.
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9. NOTICE
9.1 All notices, requests, demands or other communications by the respective
parties may be served by Recorded Delivery Post, personally or by fax to the
parties' respective addresses hereinstated (in the case of CDL and the
Receivers to the Receivers at their office at 18 Charlotte Square, Edinburgh)
or to such other addresses as they may respectively from time to time notify
to the other parties. A confirmation copy of the document sent by fax shall
also be sent to the addressee by first class post within one Business Day
after the date of transmission by fax.
9.2 Any such notice, request, demand or communication shall:
9.2.1 if delivered personally be deemed to have been received at the time of
delivery, or if delivery is not on a Business Day on the Business Day
following such delivery;
9.2.2 if given by Recorded Delivery Post be deemed to have been received in the
case of CDL and the Receivers on the second Business Day occurring and in case
of CGI on the seventh Business Day occurring after the date of posting; and
9.2.3 if sent by fax be deemed to have been received on the date of
transmission, or if said transmission is not on a Business Day on the Business
Day following such transaction.
10. ENTIRE AGREEMENT
This Agreement forms the entire agreement between the parties relating to the
subject matter of this Agreement. It is agreed that any future variation
hereof may only take the form of a formal variation of this Agreement. In
particular it is agreed that this Agreement supersedes all earlier meetings,
discussions, correspondence,
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facsimile transmission, telexes, letters and communications, understandings
and arrangements of any kind, and that there are no collateral or
supplemental agreements at the date of this Agreement.
11. TRANSFERABILITY
This Agreement shall be binding upon and enure for the benefit of the
successors of the parties or their personal representatives (as the case may
be) but neither party shall be entitled to assign, novate or transfer the
whole or any part of its rights, or obligations hereunder without the prior
written consent of the other, except that the Receivers may assign without
consent, the benefit of this Agreement, to any Liquidator of CDL.
12. SPIRIT AIMS AND INTENT
The parties hereto undertake to do all acts and things necessary or expedient
for the purpose of giving full force and effect to the provisions of this
Agreement and the spirit, aims and intent of the arrangements contemplated
herein.
13. SEVERABILITY
In the event that any clause or any Sub-clause or any part of any clause or
subclause of this Agreement shall be determined Invalid, unlawful or
unenforceable, in any extent such term or condition or provision shall be
severed from the remaining terms and conditions which shall continue to be
valid and enforceable to the fullest extent permitted by law.
14. WAIVERS
No failure or delay by any party in exercising any right, power or privilege
hereunder, shall operate as waiver thereof or prejudice any other or further
exercise by such party of any of its rights or remedies hereunder.
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15 ANNOUNCEMENTS
No party shall make any public announcement or the like, or issue any press or
other release, statement or the like in relation to this Agreement without
first agreeing the terms of any such announcement or release with the others
beforehand, except that the Receivers shall be entitled to make a full report
of all matter to the Bank, any of the parties may reveal such information to
any party as may be required by law or any regulatory authority and CGI may
reveal such information in connection with all filings, releases and
announcements advised by US Securities Counsel in connection with Federal,
State and Securities law and regulations in the United States.
16. LEX LOCI AND JURISDICTION
This Agreement shall be governed by and construed in accordance with the law
of England and each of the parties hereto submits to the exclusive
jurisdiction of the English Courts as regards any matter or claim arising
under or in connection with this Agreement.
IN, WITNESS WHEREOF, this Agreement consisting of this and the seven
preceding pages is signed and witnessed as follows on this page and the
following additional pages:
SIGNED for and on behalf of the said
CORNICHE GROUP INCORPORATED
at Roseland on the 4th day of March
Nineteen hundred and ninety six by
James Joseph Fyfe one of its directors
in the presence of:-
Witness /s/ Alan Wovsaniker
Full Name Alan Wovsaniker
Address 65 Livingston Ave. /s/ James Fyfe
Roseland, NJ James Fyfe, Director
USA
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SIGNED for and on behalf of
CORNICHE DISTRIBUTION LIMITED
(IN ADMINISTRATIVE RECEIVERSHIP)
by lAIN THOMAS WATTERS one of its
Receivers, (as agent and without
personal liability for either of the
Receivers) at an the Glasgow on
the fourth day of March Nineteen
hundred and ninety six in the
presence of:
Witness /s/ Ian Jardine Cuthbertson
Full Name Ian Jardine Cuthbertson
Address Bly Blythswood Square
Glasgow
/s/ Iain Thomas Watters
Iain Thomas Watters
SIGNED for and on behalf of THE
RECEIVERS at Glasgow on the
Forth day of March Nineteen hundred
and ninety six by IAIN THOMAS
WATTERS one of the joint receivers
(without incurring personal liability for
either Receivers) in the presence of :
Witness /s/ Ian Jardine Cuthbertson
Full Name Ian Jardine Cuthbertson
Address Bly Blythswood Square
Glasgow
/s/ Iain Thomas Watters
Iain Thomas Watters
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