On October 13th, the two flagship suites at the heart of the Stainer holiday-let business went under the hammer at London auctioneers Barnard Marcus. The sale should have taken place back in July, but Michael Stainer managed to get an injunction to prevent the auction, but this was eventually overturned.
By two ‘o’ clock both flats had ‘sold’ for a combined price of £208,000, well below the combined outstanding mortgages in the name of Doris Stainer, held by Capital Home Loans who had instructed the sale through their receivers, FRP Advisoryas a result of her bankruptcy in November 2018.
The purchaser would have paid a non-returnable deposit of £20,080 once the hammer fell and would have to complete within 28 days or forfeit the deposit. That’s how property auctions work.
The identity of the purchaser would not be disclosed, although rumours circulated that it was none other Michael Stainer himself, either directly or via a proxy. These rumours accelerated, and at least one of the flats is still occupied by a short-term tenant who was assured that his tenure into the new year was secure.
Just for the record, holiday-makers renting these flats usually paid around £175-£200 per night for this, taken from a TripAdviser review in August 2020:
Meanwhile, as the 28 days ticked by, and then the deadline passed, there was no sign of any completion. A further 7 days passed by after a completion notice was served by the auctioneers. It during this seven-day period that the rumours were confirmed, and surprise, surprise, Michael Stainer was trying to buy back his wife’s flats.
But he had a problem. His magic money tree had shed all its leaves. We are reliably informed that he approached at least three people to work out a deal whereby he could continue to benefit from these two flats.
How could someone less than a year out of bankruptcy, having paid a penny towardhis debts which exceeded £1.5 million, and facing new proceedings for bankruptcy in Canterbury County Court and a High Court hearing to disqualify him from acting as a director, could (a) conjure up £208,000 and (b) explain to his Trustees in Bankruptcy where this money came from?
What of the auctioneers? Didn’t they check whether the winning bidder had funds to complete? The answer to this is surprisingly, ‘no’.
So, did Michael Stainer have the money complete at the time he placed his winning bids? Or was he hoping to raise it in the 28 days to come up with the funds?
Either way, £20,800 has gone in a futile exercise, while the building he claims to love, is still starved of funds with a hole in its service charge account heading towards £500,000
We are now advised that Barnard Marcus are re-offering the flats to the under-bidders, a fact they denied when first contacted, but which has been confirmed by three of the originally unsuccessful bidders.
Finally, what of the hearing to disqualify Michael Stainer? This was scheduled as a two-day hearing starting on December 1st before HH Judge Burton. In the event, it was adjourned as at the last minute he was ‘unfit’ to take part in the proceedings. The Judge, with the greatest reluctance, and angered at the waste of public funds, did secure a formal undertaking from Stainer not to act as a director until the full trial. This means that Michael Stainer cannot:
Be the director of any UK company
Be involved with the formation or running of a company, nor its management or promotion
Act in the manner of a company director, for example hiring staff or taking executive decisions
Instruct a third party to manage a company under your direction.
What are the penalties for breaching a director disqualification order which is a criminal offence? The Sentencing Council has issued guidance for sentences for offences of breach of a disqualification from acting as a director. The offence is committed under Section 13 of the Company Directors Disqualification Act 1986. It is an ‘either way offence’ (magistrates or Crown Court) with a maximum sentence in the Crown Court of two years imprisonment. The guidelines are in force as from the 1st October 2018.
The sentencing guidelines should make interesting reading over the Stainer high fibre breakfast, and especially the aggravating and mitigating factors. Example of aggravating factors include:
Breach committed shortly after order made
Breach continued after warnings received
Breach is continued over a sustained period of time
Breach involves acting as a director or shadow director in multiple companies
Breach motivated by personal gain
Mitigating factors include:
Breach not motivated by personal gain
Breach committed after a long period of compliance
Genuine misunderstanding of terms of disqualification
Evidence of voluntary reparation/compensation made to those suffering loss
Breach activity minimal or committed for short duration
Age and/or lack of maturity where it affects the responsibility of the offender
Mental disorder or learning disability where linked to the commission of the offence
We suspect that Mr Stainer’s behaviour over the coming few weeks in the two other legal cases in which he is directly involved will be carefully scrutinised. As a former chartered accountant, ignorance will not be an excuse.
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