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London Capital & Finance administrators win court battle

JIM ARMITAGE

One of the men accused of having personally benefited from investments made by collapsed bond company London Capital & Finance today lost his attempt to remove the administrators from his former business.

Elten Barker was a director of London Oil & Gas, which was the biggest recipient of LCF bondholders’ cash, receiving some £129 million. He and his fellow directors put LOG into administration with Smith & Williamson last year, by which time LCF was also being administered by the firm.

However, when S&W lodged an application to question him, his legal team argued that S&W should be stripped of the role of administrator to LOG.

Judge Jones today ruled S&W’s position as administrator should remain.

Part of Barker’s legal team’s position was that LOG’s administration had been unnecessary because the company was, in fact, capable of paying its debts by selling shares in an oil explorer in which it had invested called Independent Oil & Gas.

However, as part of today’s ruling, Judge Jones found that LOG had “overvalued” the value of those shares on its balance sheet. Their £135.7 million valuation was “unsustainable on the evidence before me,” the judge ruled. The LOG directors’ valuation appeared to be based on a share price of 59.05p, the judge said, citing the administrators, when in fact their highest price in 2019 was 21.75p.

Judge Jones concluded that LOG had a total deficit of some £80.7 million, meaning it was likely to have been unable to pay its debts.

Finbarr O’Connell, partner at Smith & Williamson and joint administrator of London Oil & Gas said: “Today’s judgement makes clear that Mr Barker had no ‘legitimate interest’ in bringing his application to have the LOG Administrators removed from office. His intention was to avoid having to cooperate with the Administrators and not to attend an interview with them. The court has now made clear that he must cooperate with the administration and that he must attend such an interview very soon.

“Mr Barker's application failed, as have recent legal applications by Mr Barker’s co-director Simon Hume-Kendall and also by the former LCF trustees, Global Security Trustees. As the Joint Administrators have previously said, we view all these legal challenges as no more than attempts to stymy the Administration processes. We will be applying to the court to recoup LCF and LOG's costs on all these matters.”

Lane Bednash of CMB, the LOG conflict administrator, appointed to avoid potential conflicts of interest between Smith & Williamson’s dual roles as administrator to LCF and LOG, said: "As was disclosed in court, Mr Barker’s misconceived and cynical legal process cost the parties in the region of £500,000. It also acted to delay the payment of dividends to the LCF Bondholders.”

Barker has been identified by the administrators as being one of the "connected people" who received bondholders' money in their "personal possession or control". He is said to have received, indirectly or directly, some £1.49 million, the judge pointed out.