Unsecured creditors of the Frank Dowling-led companies, which were placed into administration last November, are estimated to be owed £15.1m, according to a report from administrators Griffins.
The report states that a number of the group’s sites have now been placed with agents for sale, including the Madison roof top site at One New Change, which is valued at £4-5m. M&C Report understands that D&D London are in talks to secure the unit. No decision has yet to be taken on Dowling’s most recent opening Far Rockaway in Shoreditch.
The lease of the American Sports and Grill and Union Square in the 02 Arena expires in April this year – the administrator reports that Dowling originally took out a loan of £6m to furnish these two sites, which have now been handed back to landlord AEG. The administrators have also discovered that the company has a 25-year lease on a Gresham Street property, which is being valued.
The administrators also states that Dowling, who was arrested by HMRC before Christmas, continued to trade through one of his companies, despite warnings that it was insolvent.
The administrator stated: “In June 2012, Frank Dowling, as director of Greenwich Inc Trading, sought the advice of an insolvency practitioner. The advice received was that Greenwich Inc was insolvent and should be placed in creditors’ voluntary liquidation. Notwithstanding the advice, Greenwich Inc continued to trade for over 12 months and, at the same time, a number of companies were incorporated in Scotland with the intention that these new companies would acquire the trading businesses. Further companies appear to have been formed into which the leases owned by the companies were to be transferred.
“The trading businesses were transferred from Greenwich Inc into the Scottish companies incorporated to run each site and no consideration appears to have been paid to Greenwich Inc in respect of goodwill, stock and money on site in the form of takings and floats. Following this transfer a meeting of creditors was called to place Greenwich Inc into creditors’ voluntary liquidation.
“Mr Dowling failed to attend the meeting so on 17 October 2013 Royal Borough of Greenwich presented a winding up petition against Greenwich Inc. Mr Dowling asserted that HMRC was owed nothing for VAT as Greenwich Inc Trading was part of a group registration. The demands were made on another associated company, Greenwich Inc Holdings, and that was PAYE was £147,999. Once the provisional liquidator of Greenwich Inc Trading reviewed the accounting records it was apparent the (company) owed HMRC £3,920,502 in VAT and £2,108,696 in PAYE.
“The books and records meticulously recorded all PAYE deductions and VAT matters, but it appears no attempt was made to provide this information to HMRC. Instead, there appears to have been a significant under-declaration of VAT in the periods until September 2012 and after than no VAT returns were submitted – this is despite a firm of accountants being instructed to ascertain the true position, working on the accounts for seven months and invoicing around £60,000 and receiving £27,000.”
The administrator reported that each of the company’s sites had been cleared of cash when Licensed Solutions attended them post-administration. It also “transpired that no staff had been paid for the work they had done in November, a situation they were not unaccustomed to”.
