Every so often, Xmas comes early for those who believe in casting light into dark places. One such dark place is how Michael Stainer (pictured) has financed his activities over the years, and in particular, the complex mortgage arrangements spread over his 20 property assets. Now we are able to cast some light, thanks to his and his wife’s bankruptcy. What we have found raises some very serious questions about both Stainer the borrower, and his various lenders.
Bear in mind two key factors and remember who the various authorities are dealing with:
As bankrupts, regardless of their discharge, the Stainer properties are now vested in the Trustees in Bankruptcy. They are required to seize and sell them for the benefit of creditors such as HMRC (owed £763,000) and the building maintenance account of the Grand (owed £330,000). This is a slow and laborious process and long way removed from the smash and grab repossessions we see in “Can’t Pay? We’ll Take It Away!” on Channel Five. To date, 15 months after they were declared bankrupt, not one lock has been changed, not one property has been repossessed, not one penny collected
In addition to the Trustees, the mortgage lenders have the absolute right to seize these properties as secured creditors under the Law of Property Act 1925. They too seem paralysed into inaction
All of the mortgages bar two were taken out post-2000 when Stainer returned as a director of Hallam Estates Ltd having emerged from his Individual Voluntary Arrangement. This
IVA was set up after the repossession of the Grand in 1995 by Barclays Bank and its resale to Hallam Estates Ltd in 1996 for £148,000. Even then, the residents’ building maintenance fund was owed some £130,000 by Stainer.
So how much do the Stainers now owe the various mortgage lenders? As of late 2019, the total was £2.4 million. As to the repayments on this debt, and we must assume they are still being made, at an annual interest rate of 5%, the interest comes to £120,000 per annum — £10,000 per month. On a capital and interest basis, the monthly figure rockets to over £25,000 per month.
There is a more serious issue here. It is clear to everyone, without exception, that 15 months after bankruptcy, the Stainers still have total control of their flats, and enjoy the income generated by the 18 holiday lets and the garage complex, estimated to be between £300,000 to £400,000 per annum. One client alone, according to Stainer’s former solicitor, pays around £40,000 per annum.
The mortgage lenders of the flats and the garage complex are clearly turning a blind eye to their obligations as responsible lenders and they are certainly fully aware of the situation. Notwithstanding, they are continuing to accept mortgage payments from the Stainers, knowing full well that this money should be flowing to the Trustees in Bankruptcy to pay creditors. They are, it would appear, conniving at what could be offences under the Insolvency Act. To put it simply, they are receiving money to which they are not entitled. Their “offences” are worse still. They know there are massive building maintenance arrears on these flats, one flat alone ‘owes’ £40,000, and have refused to pay them or cooperate with recovery.
So, who are these ‘delinquent’ lenders who show such blatant disregard for the insolvency regulations and legitimate creditors? The mainstream lenders amongst this group include Birmingham Midshires, Bank of Ireland and NatWest, all respectable household names. They have a lot to answer for!
There are lots of unanswered questions here:
Have the lenders been recklessly lending? Certainly, the pre-2008 lending climate was overheated as lenders fought each other to lend and this, of course, led to the great crash of 2008.
Were, and are, the lenders aware of the commercial usage of the flats as holiday lets or were they told they were for residential use?
How did the Stainers raise 19 mortgages so easily, including one on a non-existent flat?
Is this holiday-let business VAT registered? That one is easy — no.
Is there a black cloud of negative equity hovering over these flats, aside from the heavily mortgaged fake flat?
And let’s not forget, the building maintenance charges for these flats were never paid and today’s arrears debt stands at over £330,000. So, the forty or so residential leaseholders have propped up very fabric of the Grand which houses Stainer’s commercial property
business, while these lenders have been happily trousering the interest payments and ignoring requests to settle this service charge debt.
Scandal? Hardly a strong enough word… depending on your perspective, there are issues here that demand investigation by, among others, the Financial Conduct Authority, the Council of Mortgage Lenders , HMRC (again!), the Insolvency Service and who knows who else!
