The Financial Conduct Authority has secured a conditional agreement with Park First Limited and its senior managers regarding compensation for investors who have suffered a loss after investing in the car parking scheme.
In an update today (July 20), the FCA said it had come to a conditional resolution with the defendants in proceedings seeking compensation for approximately 4,500 investors in the failed Park First scheme.
The agreement should see a further £25m made available for compensation to investors, added to the £33m already secured from the sale of the car park at Luton airport.
It is conditional on investors approving the Company Voluntary Arrangements (CVAs) in respect of the Park First companies.
Mark Steward, executive director of enforcement and market oversight at the FCA, said: “The agreement, if approved, represents a better outcome in the proceedings for investors than could have been achieved through continued legal action, given the financial position of the parties. It also gives investors the final say on the merits of the conditional agreement.”
Last October, the FCA started legal proceedings against Park First Limited and its senior managers with the aim to win compensation for investors.
It had lodged a claim against the firm, its chief executive officer and a number of other companies connected to the group.
The regulator had also asked the court to order Park First Limited to pay a sum to the FCA which could then be distributed among the investors who suffered losses.
Park First Limited, and its related entities, promoted and operated airport car parking investment schemes but were not authorised by the FCA and not permitted to provide regulated financial services.
Four of the Park First companies involved in the scheme were placed in administration in July 2019.
In today’s update, the FCA reached an agreement with chief executive Toby Scott Whittaker, director John Slater and a number of companies involved or connected to the Park First Scheme.
The FCA said Whittaker will need to realise most of his assets to pay the sum of £25m, which will be paid in instalments on the sale of the assets.
If any instalment is unpaid, Whittaker has agreed not to contest the debt for the purpose of any bankruptcy proceedings brought by the FCA.
If the arrangements are approved, the defendants will consent that they breached section 19 of the Financial Services & Markets Act, 2000 by operating a collective investment scheme without being authorised by the FCA.
If the investors do not approve the arrangements and the conditional agreement, the FCA’s proceedings against the defendants will continue. The trial is fixed for hearing in February 2022.
The FCA first intervened with Park First Limited in 2016 and in December 2017, the firm agreed to stop operating and promoting these schemes in their original form after intervention by the FCA.
Following the FCA’s action, the scheme was restructured, and investors were offered the chance to get their initial investment back or move into a different scheme.
However, the operation proved to be uneconomic and the companies involved in running the scheme entered into administration in July 2019.
The original Park First companies entered administration on July 4, 2019 with Emma Thompson, Finbarr O’Connell, Andy McGill and Adam Stephens of Smith & Williamson LLP, appointed as joint administrators.
Better outcome
The joint administrators from Smith & Williamson said an asset realisation plan has been agreed by Whittaker, in order to be able to pay the £25m contribution.
The administrators said they were confident the settlement, when totally funded, would result in a better outcome for investors and creditors of the companies who, without the settlement, were unlikely to receive a return until 2024.
Thompson said: “After many months of lengthy discussions between the parties, I’m pleased that investors and creditors can now benefit from an enhanced return.
“Investors and creditors will have the ability to choose whether the CVA proposals are acceptable and, if they are, whether to continue to be invested in the car parking business or to exit their car parking investment. In both cases investors and creditors will receive a CVA dividend.”
The administrators will shortly be writing to all investors and creditors of the companies to provide information and to request completion and return of documentation in order to facilitate the payment of car parking amounts due, as well as to vote on the CVA proposals.
If the CVAs are not approved, the companies will be placed into liquidation where returns to investors and creditors will only be achieved through the sale of the car park land plus whatever financial return can be achieved through litigation, both of which could take at least three years to complete.
Thompson added: “I’m acutely aware of investors and creditors' frustrations as to the time it has taken to be able to move forward, however, the enhanced returns that they stand to receive mean it was worthwhile.
“We will be in touch with the investors and creditors to answer the very important question as to ‘What comes next?’ very soon and so we ask that investors and creditors do not contact the joint administrators until they hear from us as regards the way forward.”
sonia.rach@ft.com
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