On Thursday 4th July 2019, following an out-of-court application by directors, Finbarr O’Connell, Adam Stephens, Emma Thompson and Andy McGill of Smith & Williamson LLP were appointed as joint administrators of the following four companies (the “Companies”):
- Park First Freeholds Limited (in administration);
- Help Me Park Gatwick Limited (in administration);
- Park First Glasgow Rentals Limited (in administration);
- Park First Gatwick Rentals Limited (in administration).
The Companies that have now been placed into administration are involved with the operation of car parking schemes close to Gatwick and Glasgow international airports. Park First Freeholds Limited and Help Me Park Gatwick Limited own the freeholds to the relevant car parks. Park First Glasgow Rentals Limited and Park First Gatwick Rentals Limited operate Lifetime Lease Schemes (‘LLSs’) for investors in those car parking schemes.
The car parks are continuing, and will continue, to operate as normal during this restructuring period.
Investments in these car parking schemes were originally sold to individuals and corporates in the UK and internationally, both directly and some through SIPP providers.
The FCA raised concerns a number of years ago that these car parking schemes were collective investment schemes and so the car parking schemes were restructured in 2017-2018. Some investors opted to have their original investments bought back by Park First Freeholds Limited or Help Me Park Gatwick Limited (the ‘Buy-Back creditors’) and some investors elected to become LLS members, whereby they granted a long lease of their parking space to a Park First company. They were then entitled to certain financial returns from the car parking schemes.
As set out below, the joint administrators’ intention is to develop proposals as part of a suite of Company Voluntary Arrangements (“CVAs”) in relation to the Companies which will address, as far as possible, the financial positions of both Buy-Back creditors and LLS members.
Park First Freeholds Limited and Help Me Park Gatwick Limited have become unable to meet their obligations to Buy-Back creditors as they have fallen due. The Companies have therefore been advised that making any further payments to Buy-Back creditors may result in a preference of one creditor over another. The intention of the administrators who are now (post-appointment) seeking to prepare CVAs, is to propose an arrangement to the Buy-Back creditors.
Related entities have already pledged c.£33m to the forthcoming CVAs and these pledged funds will be allocated to those creditors of the Companies with legally valid claims.
Lifetime Lease Scheme members
As mentioned above, the LLS members are entitled to certain ongoing financial returns under the terms of the car parking schemes. These financial returns to the LLS members will be suspended while the terms of appropriate CVAs are put together by the administrators. As mentioned above, related entities have already pledged c.£33m to the forthcoming CVAs and some of these funds may need to be allocated towards LLS members for the purpose of the CVAs. The joint administrators’ expectation is that the car parking schemes will return to being operational for the benefit of the LLS members once the CVAs become active.
The proposed CVAs
On the basis of the above pledged funds, the joint administrators are intending to formally propose CVAs to the Buy-Back creditors, the LLS members and the other creditors of the Companies. Such CVAs will be launched as soon as possible and the administrators will provide a clearer update to all those investors and other creditors affected by the CVAs, nearer the time.
As mentioned above the key intention of the CVA proposals to be issued by the administrators will be to maximise the return to all creditors of the Companies, including Buy-Back and LLS members.
What happens next?
- Buy-Back creditors, LLS members and any other creditors of the Companies will receive a letter from the joint administrators informing them of their appointment and setting out the routes by which they can obtain further information with regard to the administration process and how it will affect them. This will include access to Questions & Answers (‘Q&A’) websites run by the Companies and by the administrators.
- As mentioned above, the administrators intend to issue CVA proposals to the Buy-Back creditors, LLS members and any other creditors of the Companies and their current estimated timing is that such proposals will be available within two months of the date of administration.
- The Buy-Back creditors and LLS members (and other eligible investors and creditors) will, at a formal CVA meeting, vote on the terms of the CVAs which, it is hoped, will take place on or soon after 4 October 2019. Confirmation of the CVAs would require over 75% (by value) of the Buy-Back creditors, LLS members and other creditors of the Companies to vote in favour of the terms of the CVAs and that there are no successful challenges to the CVAs.
- The administrators, who it is intended will also become the supervisors of the CVAs, would then commence to operate the terms of the CVAs. In this regard, the administrators and the supervisors of the CVAs will make every effort to (1) pay a dividend to the creditors of the Companies and (2) regularise the payments due to the LLS members, as quickly as possible
- During the remaining term of the CVAs, the supervisors of the CVAs will pay the maximum available dividends to the creditors, which mostly consist of the Buy-Back creditors and the LLS members, of the Companies.
The above sets out an initial outline of the objectives of the administration and the CVA processes and further information will be provided to the Buy-Back creditors, LLS members and the other creditors of the Companies on the Q&A websites mentioned above, whose addresses are set out below, during the period of the administrations and of the CVAs.
Joint administrator Finbarr O’Connell commented: “As part of the restructure of the Park First car parking schemes in 2017, purchasers/ investors were given options of either a Buy-Back payment or to convert to be members of a Lifetime Lease Scheme. Due to the number of purchasers/ investors that requested Buy-Backs and due to operational difficulties with the operation of the car parks and potential claims against the Park First rental companies, the Companies do not currently have sufficient funds available to satisfy the financial demands on them. On this basis, professional advice was sought and the directors resolved that the Companies should be placed into administration to provide protection for the benefit of their creditors.”
Joint administrator Emma Thompson commented “The joint administrators believe that a suite of Company Voluntary Arrangements (CVAs) will give the Companies in administration the best opportunity to maximise realisations for their creditors. We will therefore be working with the directors to put forward appropriate CVA proposals, based on a review of the assets to be made available to creditors through the CVA processes. Our objective is to pay the maximum available dividends to the creditors of the Companies, which mostly consist of the Buy-Back creditors and the Lifetime Lease Scheme members, during the period of the administrations and the CVAs”
The joint administrators have set up a dedicated helpline and email address for creditors of the Companies and the Companies’ websites will be updated with information including a Q&A document.
By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article in any way. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing.
The affairs, business and property of the Companies are being managed by the joint administrators Finbarr O'Connell, Adam Stephens, Emma Thompson and Andy McGill who act as agents of the Companies and without personal liability. Finbarr O'Connell, Adam Stephens, Emma Thompson and Andy McGill are licensed as insolvency practitioners in the UK by the Institute of Chartered Accountants in England and Wales.
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