As Michael Stainer (again) and Hallam Estates, the company he set up in 1995 to keep control of the Grand, both slide towards insolvency under the burden of £500,000 of debt, let’s remind our readers of his first version of the Great Escape.
There is no doubt that he is a master at promoting the image of the man who rescued the Grand from the wrecker’s ball. We would happily concede that he has expended vast amounts of energy in keeping the Grand, and himself afloat. We can also testify to his ability to minimise his outgoings at the Grand at other people’s expense, as local traders can testify today. The historic example we will now tell relates the history of how he reduced his personal liability of £120,000 by 93%!
This comes to us thanks to the archives of the Residents Association which date back to 1978. What depressing reading they make, as we see arguments about maintenance charges, questionable accounting practices, the difficulty of extracting payment from Stainer as freeholder on page after page. Names of residents long departed, good people all, cry out in frustration and anger. Occasionally a small victory is won, only for the fruits of this victory to vanish.
The festering sore of non-payment of maintenance charges in the 1980s and 1990s helped precipitate the Individual Voluntary Arrangement (IVA) which Stainer entered into on the 16th February 1995.
An IVA allows a debtor to avoid bankruptcy by doing a deal with creditors and offering them a specific amount which invariably heavily discounts the full debt. The majority creditor in this case was Barclays Banks, with leaseholders owed around £130,000, powerless to have any impact. This was the deal:
This IVA was linked to the appointment of a Receiver for the freehold of the Grand on December 13th 1994 on the petition of Barclays Bank who had a fixed charge over the freehold of the Grand. Barclays were the driving force behind the IVA which saw leaseholders outmanoeuvred. To add insult to injury, they saw Stainer return as freeholder in the guise of Hallam Estates.
For the avoidance of doubt, because there should be no doubt, check out the original forms that incoporated Hallam Estates Ltd. and this hand-written note on the back of one page of the application. No sign of the name Stainer, but the handwriting – unmistakeable! Note how he asks the Registrar of Companies if the incorporation certificate can be “expedited as it is intended the company will acquire a property on 14th December 1995.” That is chutzpah on a sublime scale, not that Mr Stainer will appreciate being praised with a Yiddish word.
So in a deal whose details are no longer shrouded in darkness, The Grand was sold out of receivership to Hallam Estates. In the words of Susan Maund, then of BDO Stoy Hayward, the supervisor of Stainer’s IVA, this was “to the best of my knowledge an unconnected company”. How easily fooled Ms. Maund was, but she was in good company.
All of this comes from Ms.Maund’s closing IVA report issued in July 2000 to Canterbury Court case no: 571 of 1994 under the Insolvency Act 1986. She states that “the failure of Mr.Stainer to make contributions to the IVA constituted a failure.”
But to show that nothing changes, the report goes on to say to that “Mr.Stainer as Landlord of the property was responsible for contributing towards the maintenance” but that “over a period of approximately 10 years Mr.Stainer failed to make these contributions to the Maintenance Fund. The shortfall was funded by lessees…. The shortfall was approximately £120,000 by the time of the IVA.”
However, all Stainer paid according to Ms.Maund says “is 7p in the pound.”
We have written before at the concerns of elderly residents at the massive maintenance bills that have come their way. This clearly irritated Stainer as in one paragraph of a response to an earlier article in 2016 he wrote:
“The £500K your website claims is necessary to restore the western elevation is not the freeholder’s responsibility.”
Actually, the figure laid before the First Tier Tribunal in January 2018 was over £1 million. However, in a letter he wrote as far back as September 28th. 1983 to Lesley Watkins, a former resident of the Grand and an active member of the Residents’ Association, he stated:
“Landlords Maintenance Contribution: As you rightly point out, I am obliged to pay about 20% of the maintenance costs.”
Can’t pay, won’t pay , hasn’t paid – will he ever pay? Has personal bankruptcy saved him from putting his hand in his pocket?
He and his wife went bankrupt in November 2018 and to date, creditors have not seen a penny. Not a single asset has been seized and its value turned into a dividend. Yet at the same time, the Stainers continued to cash in on the holiday rentals earned on their forfeited assets — until March 23rd saw the COVID-19 lockdown arrive and turn off the income.
How ironic if a virus from China achieves what Tribunals, County Courts, High Courts, Insolvency Practitioners have all failed to achieve.
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