[2025] EWHC 2830 (Ch)

The issue which I need to determine is who effectively is entitled to the sums (the Funds) currently held by Mr Barnett, the Applicant, as the administrator of the three companies referred to in the title above. On 21 April 2022, Mr Barnett, was appointed as Administrators of General Consolidated Limited ( GS ) and Orex Consultancy Limited ( Orex). On 4 May 2022, he was also appointed as administrator of General Subsidiary 2 Limited (GS2). I will refer to these three companies as the Orex Companies. Those appointments were made by the security holder, WSL-Cyan Limited (Cyan). Mr Barnett currently holds the sum of £5,666,844 as the Fundsfrom the realisations of Orex Companies. He has already made earlier distributions of sums received to the secured creditor.

GS2’s business was to operate banking facilities for secured lending. GC’s business was to facilitate the making of loans, in particular loans secured on property of the borrowers. Orex’s business was that of lending, specifically to borrowers under the Coronavirus Business Interruption Loans Scheme. Mr Augousti was a director and ultimate beneficial owner of the Orex Companies.

The Orex Companies obtained the funds which were the subject of their onwards lending from Cyan which in turn sought the funding for the lending from other sources. The sums available for onward lending by Cyan came from other members of the Wilton Group of Companies. Cyan was a member of the Wilton Group and was a wholly owned subsidiary of Wilton Nominees Limited which in turn was a wholly owned subsidiary of Wilton UK (Group) Limited

Cyan is the company in the Wilton Group which has the benefit of security over the Funds held by Mr Barnett. Its Joint Administrators’ position is that in accordance with the security documentation, the Funds belong to Cyan under the terms of the security documentation.

Mr Michael Flanagan is a director of GM Secured Lending Opportunities 1001 Limited ( GM1001), GM Secured lending Opportunities 1002 Limited (GM 1002) and GM Secured Lending Opportunities 1003 Limited (GM 1003) (together the GM Companies). Mr Flanagan was also a director of many of the Wilton Group companies, including, as noted above, Cyan, Wilton UK, WSLL and Hartley Pensions Limited ( HPL).

The GM Companies assert that they provided the funding to the Orex Companies as part of a syndicate of lenders and that Cyan was acting as a nominee/agent of the syndicate. Mr Flanagan asserts that the GM companies provided funding to the Orex Companies via Cyan in a total sum of some £15,000,000 and that they have the economic interest in the funds because they remain the only unpaid lender. GM 1003 was dissolved via compulsory strike off on 31 December 2024.

Another member of the Wilton Group is HPL, a pensions service provider which administers self-invested pension schemes (SIPP schemes) as well as small self administered pensions schemes containing around 840 members. Mr Flanagan was also a director of HPL. It went into administration on 29 July 2022 with Mr Peter Kubik and Mr Brian Johnson being appointed as Joint Administrators. HPL asserts that it considers that there is a trust to its benefit over the Funds. It asserts that the sums totalling £15,000,000 were transferred from HPL members accounts and from the pension funds without authority to WSLL and thereafter used as part of the funds lent by Cyan to the Orex Companies. However, Mr Kubik sets out in his evidence that he has not been able as yet to complete his investigations and therefore whilst he considers that a trust is created in favour of HPL, he still needs to carry out further investigations. Helpfully, Ms King, acting for HPL, produced an additional skeleton argument during the hearing which set out the legal basis of the trust argument made by HPL through its joint administrators (the HPL administrators), albeit this was limited by the investigations not having been completed by Mr Kubik.

Mr Simon Nuttall is a holder of a pension which was administered by HPL. He has brought an application for a representation order asserting that he acts on his behalf and on behalf of other beneficiaries of pension schemes. At the start of the hearing, I heard his application and refused to make the order. Such an order would have caused the adjournment of the trial fixed before me. Additionally, it seemed to me that the interest of the pensions could ably be represented by the HPL administrators. During the course of the hearing and also in his written submission and evidence, Mr Nuttall made various allegations concerning the conduct of the HPL administrators. Those issues were not replied to by the HPL administrators other than denying them in general terms. Such matters do not form part of the issues I have to determine and accordingly they form no part of this judgment. In determining the issues which relate to the preliminary issue, I have therefore taken no account of the criticisms raised by Mr Nuttall or indeed criticisms made by others against any of the office holders and their conduct. Mr Nuttall invites me to appoint another person to take charge of the sums and thereafter effectively to distribute to the beneficiaries of pensions schemes.

Mr Nuttall was one of the parties allowed to file evidence in accordance with the order of Chief ICC Judge Briggs dated 7 May 2025. He has filed evidence in compliance with that order. He asserts that the majority, if not all the Funds belong to the HPL pension beneficiaries rather than any other party.

Mr Augousti, a director of the Orex Companies and ultimate beneficial owner asserts that he has an interest in the sums being held by Mr Barnett. He maintains that he is an unsecured creditor of the Orex Companies. He believes that the Orex Companies, despite the companies being in administration, were expected to have a surplus. His position appears to be that he supports the claim of Cyan, the secured creditor as effectively being entitled to the Funds. He asserts that if the court determines this to be the position, then he alongside other unsecured creditors, have an interest in the Funds.

Before me, Mr Barnett took a neutral stance in that he was seeking the directions as to the ownership of the Funds. I am grateful Mr Groves for setting out the history of the proceedings and the numerous other applications which have been issued in these proceedings. I do not propose to set out the procedural history or deal with any other proceedings as yet not determined by the court beyond the preliminary issue.

By order dated 7 May 2025, Chief ICC Briggs directed the determination by way of preliminary issue, ‘….the entity or persons with an economic interest in the Companies and who are ultimately entitled to the funds currently held by Mr Barnett derived from and following the collection of the loan book of the Companies ….’

It became apparent early on in the trial that the wording of the preliminary issue was not as clear as it could have been. It seemed to me that the words ‘economic interest’ should be taken as encompassing beneficial interest. The economic interest would encompass a person who has the actual interest in the funds rather than their legal owner. Another way of describing this would be to ask who had the beneficial interest in the funds. I have approached this preliminary issue as a way of asserting a beneficial interest rather than legal title. This also accords with the way in which those asserting an economic interest have set out their case. None of the parties before me objected to this approach.

An order was made for the attendance of certain deponents of witness statements. Mr Andronikou, Mr Barnett, Mr Augousti, Mr Flanagan, Mr Rossier, Mr Garwood and Mr Loizou attended and were cross examined. Mr Kubik was unable to attend the first two days of the trial and made an application pursuant to 12.28(4) of the Insolvency Rules 2016, seeking permission to rely upon his written evidence as his evidence in chief without requiring his personal attendance at the hearing. After hearing from other parties, I granted Mr Kubik’s application despite the objection of the GM Companies and Mr Nuttall. The issue is then as to what weight I give to the evidence of Mr Kubik as set out in his witness statements.

The witnesses who gave evidence were cross examined on a very wide range of issues. With the exception of Mr Flanagan, Mr Rossier and Mr Garwood, many of the issues raised in cross examination by various parties were not, in my judgment, relevant to the preliminary issue. There was extensive cross examination of Mr Barnett in relation to his involvement with Mr Flanagan and in particular questions relating to Mr Stuart Cottingham, a partner/manager who worked with Mr Barnett. Mr Nuttall asked many questions which touched upon conduct of the relevant office holders and their dealings. I do not propose to go through the evidence, either in the witness statements or provided during cross examination in this case unless it is relevant to the preliminary issue.