26. Insolvency Happenings to 21st March 05
Eventually the Accountant in Bankruptcy responded to Alan Caine’s February 18th 05 letter as found in chapter 24 above and supported by Stewart Stevenson MSP’s letter of 28th February 05 found in chapter 25 above.
Mr Caine remains unhappy with the Accountant in Bankruptcy’s response – the correspondence is as is found below is self explanatory:
A. Alan Caine’s letter to MSPs dated 21st March 05.
B. Alan Caine’s reply of 2005-03-21 to the Accountant in Bankruptcy.
C.The Accountant in Bankruptcy’s 2005-03-18 response to Mr Caine’s February 18th 2005 letter.
Please find enclosed my response to the Accountant in Bankruptcy’s letter of the 18th March 05. Whilst I was concerned before her response, I am now fearful for her letter displays a lack of progressive insolvency understanding and a dearth in appreciation of current insolvency legislation. She has refused to honour undertakings made to the creditors at Martin Frost’s August 2004 creditors meeting, and currently she appears to have initiated further wasteful cost consumption against the creditors because I had the temerity of criticising her apparent negligence.
The Accountant in Bankruptcy, Mrs Thomson, and her employees, contrary to UK and EU law do not have any professional insolvency qualifications – it is not unlike putting a hospital administrator in charge of a surgical operation who, when she prompts excessive patient bleeding, decides to cure the situation by chopping off the patient’s head. I seek your help in exerting a brake upon an official who appears to be about to run riot. Factually and legally as per my response below, I believe the Accountant in Bankruptcy has ‘screwed up’.
Your faithfully
Alan R Caine
[23/3/2005 - some of
the replies which have been received can be found here ]
Dear Mrs Thomson,
Your letter to me of the 18th March 05 reads very well to the uninformed: but to fellow creditors of Martin Frost it is an admission of negligence and displays substantial legal and factual misunderstandings. I am a moderate man with a genuine grievance who is attempting to be constructive so I find your comprehension and analysis deeply upsetting and an affront to my common sense – furthermore your letter confirms by omission that you appear not only seek to put me down but as I see it, your letter is an attempt to placate third parties by your shibboleths of:
• you require to realise assets
prior to adjudicating creditors
• it is proper policy without
legal
advice for you not to become involved
in legal actions begun by or against debtors
• that there is confusion over
the
ownership of assets.
I do not except this – indeed I suggest these shibboleths are a mirage to smokescreen your own failures.
You write: ‘I do not accept that the administration of this case has been unduly delayed or that assets have not been safeguarded.’
I disagree: in your letter there is no mention at all of Martin Frost’s July 2004 offer of compound as discussed and put to the August 2004 creditor’s meeting – to discharge his sequestration via the immediate payment of 100p in the pound to all his creditors except for twenty four creditors like me who are agreeable to postpone our debt and so directly allow all other sequestration creditors to receive the 100p in the pound. Again there is no mention in your letter that supporting creditors have offered to fund the adjudication of creditors In short, this sequestration could have been discharged (concluded) by composition at no cost to the public taxpayer.
May I refer you to www.martinfrost.ws section E chapter 7 –‘The Offer of Compound’. You will note that Martin Frost’s offer encompassed the partial realisation of Scottish Academic Press books under your suzerainty – books that are now impaired-- if you currently made good this book loss why couldn’t this offer of compound still be implemented? Bluntly, your failure to act on the compound and your failure to take up the repeated offers to fund an adjudication I see as your fault in causing undue delay.
Assets have not been safeguarded.
Assets destroyed.
Mention is already made of the loss of the Scottish Academic Press book stocks and I understand that you are not responsible (the police having apprehended the culprits) for the vandalism, the arson attack and resultant water damage where upwards of two million pounds of stock has been lost but I do find it deplorable that you have not seen fit to even inspect the damage – I also find it abhorrent that you have requested that the police seek to provide you with a possible ‘loop-hold’ so you might evade your responsibility for failure to insure – it seems that more good public money is being wasted at your direction.
Assets apparently given away.
The John Parkes’s scenario. You will recall that Martin Frost was sequestrated on the petition of Cintec International Ltd--not on account of any personal matter of his own but due to a partnership obligation on a purported partnership business English debt prompted by his business partner John Parkes defaming Cintec International’s business practices, particularly over the purported abuse of patents. You are also the permanent trustee of John Parkes – a conflict of interest in any book. Shepherd & Wedderburn, Cintec’s Scottish lawyers, stated, in December 2004, to your agent that these patents were only worth £20,000 in which sum Cintec was prepared to purchase. Such sum is suitable to Mr Parkes because in terms of the proportionality of costs to benefit English court costs rules, Mr Parkes hopes to persuade the English taxing court to reduce the taxed sum down to £20,000 from the contingent sum upon which Frost and then Parkes were sequestrated.
Notwithstanding this Martin Frost obtained an offer of over £300,000 for the US & UK patents from associated friends of the billionaire John Templeton. Mr Parkes did not like this offer – his personal approval I understand is required under US law -- you supported Mr Parkes and so Mr Parkes states you have so passed back to Mr Parkes patent assets associated with the partnership which should have benefited the creditors of Martin Frost. In short, if so, you have failed in your duty to the creditors of Martin Frost and furthermore your have failed in your fiduciary duty from assumed partnership obligations.
Assets potentially lost:
By your failure to act or instruct over £200,000 of solid potential sequestration assets may well have been lost to prescription (time bar) despite repeated attempts made by Martin Frost to prompt a decision from you. I have few words to say about this gross dereliction regarding such matters as Martin Frost’s accepted industrial injury claim.
You write: ‘Mr Frost was seeking to have his sequestration recalled. Action to realise assets was suspended pending the outcome of the petition hearing as we judged it appropriate to give Mr Frost assistance to preserve his estate in the event of a successful outcome. To take pre-emptory expensive investigative action would have prejudiced both the debtor and creditors. I understand that the matter has now been put back until October 2005. In view of this I have asked the Agent handling the case to progress the administration in accordance with the Bankruptcy (Scotland) Act 1985 (as amended) but given the circumstances surrounding the estate I do not anticipate a speedy conclusion. The position with regard to Scottish Academic Press will be investigated, as will the competing interests of the sequestration and the Individual Voluntary Arrangement’.
Martin Frost is a dying man, he has repeatedly attempted to have his assets realised in a coherent and proper manner – his Individual Voluntary Arrangement is part of that process. There are no competing interests between the sequestration and the Individual Voluntary Arrangement. His estates are complex but not difficult to understand. All matters prior to January 18th 2000 belong to his Individual Voluntary Arrangement (IVA) and post belong in the sequestration. This separation date was ruled upon in the Scottish courts first at Jedburgh Sheriff Court by Sheriff Paterson in January 2000 in Frost v Scottish Borders Council and thereafter by Lord Dawson in the Court of Session also in 2000. As to the separation and prior ranking of the IVA to a sequestration, this was ruled upon by Lord MacFadyen in the Court of Session after a two day hearing and expert submission in 1999 in Frost v Inland Revenue in which the Inland Revenue lost their attempt to have sequestration proceeding overturn and negate the IVA insolvency – furthermore since the Inland Revenue was bound by the English IVA, Lord MacFadyen ruled that under the cross-border insolvency provisions of the !986 Insolvency Act it was not competent for the Inland Revenue to raise fresh proceedings under Scottish insolvency law when insolvency jurisdiction had been seized first by the English court – why then do you condone Unity Trust Bank’s IVA claim in the sequestration when the Court of Session has previously ruled that such practice is unlawful? Realisation of Martin Frost’s IVA assets was delayed for nine years until the First Division of the Court of Session concurred in April 2004 that Unity Trust Bank’s inhibitions and arrestments no longer were lawful against Martin Frost’s IVA and post IVA assets. Steps as you are aware were then made to realise these Scottish assets belonging to the IVA but they were blocked by you by your inability to reach a determination on your legal position not withstanding that the Inland Revenue contacted your officials direct to allow the IVA realisation to proceed. Again in January 2005, thanks to Martin Frost’s repeated prompting, the IVA Supervisor wrote to your agent Mr MacGregor suggesting a meeting whereby this perceived impasse could be concluded – you tendered no response till my complaint prompted a meeting for this week coming. By assignment I am, like many other of Martin Frost’s friendly sequestration creditors also a creditor of the IVA – your above excuse ‘as we judged it appropriate to give Mr Frost assistance to preserve his estate’ is blatantly untrue. There have been repeated attempts by Martin Frost , the IVA Supervisor and the creditors to allow asset realisation – there is unanimity between Martin Frost and his creditors to have the assets realised – ironically it is you that currently delay realisation.
You write: ‘many parties have declared themselves creditors of Mr Frost. As is normal a formal adjudication on claims will be carried out once sufficient funds are realised to pay a dividend. As you know, that stage has not been reached. Once the formal adjudication has been completed the debtor and creditors will be notified of the outcome and will have the statutory right of appeal in terms of section 49 (6) of the aforementioned Act against all or any individual adjudication.’
I live in Majorca but via e-mail I correspond with Martin Frost and his creditors upon a regular basis. I believe on balance that those creditors who gave their support to the creditor deferment in the ‘Offer of Compound’ have proved to be the least vociferous to your employees and your agents. We have all attempted to assist, some are prepared to fund an adjudication. Personally, I do believe you have been subjected to and influenced by purported creditor noise. I find it very upsetting that
• Andrew McNamara openly boasts
in court (Tods Murray v Frost &
McNamara) that he and his cronies (i.e. Pentland-Clark etc) have
consumed more than £15,000 of your time
• Certain solicitors (i.e. Franks
to McNamara etc) are said to privately
boast of their time and cost wasting tactics.
Now given that:
• in 2002 in Frost &
McNamara v Brodies (An Usher assigned
cause similar to Clark etc) the Extra Division of the Inner House of
the Court of Session under Lord Coulsfield determined that Frost and
McNamara were in a ‘joint venture partnership’ with a single interest
which therefore prohibited the Jedburgh Sheriff dismissing McNamara
alone from the action –
• and subsequently there have
been rulings by Sheriff Principal
McPhail (December 2004 in Horseshoe Gallery v Frost &
McNamara) and by Lords Brodie and Dawson (in February 2005 in McNamara
& Frost v Levy & McRae) which not just ruled that McNamara
& Frost were in partnership but awarded costs against McNamara for
his continued denial of such.
Thus given that these judicial decisions have been brought to your attention I find it inexcusable that you still choose not only NOT to adjudicate upon McNamara and his acolytes but you churn up fees listening to their nonsense which in turn you seek to fee the sequestration. Is this not dishonest of you?
Though there are many other criticisms which I will write privately to you about, I find it appalling that you as ‘Scotland’s El Supremo’ on insolvency fail to adopt insolvency provisions first crystallised into Scottish law through the 1986 Insolvency Act – so in respect of court costs there is a profound difference to what constitutes a contingent creditor in Scotland to other parts of the UK. This refusal to bring insolvency practice in Scotland into uniformity with the rest of the UK and EU has produced anomalies in which you appear to attempt to justify delay and legal cost over-runs – which as your letter notes prompt prudent creditors like me to challenge your expenses and possibly seek damages against you. Finally, may I suggest that you revamp the wording of the sequestration award interlocutor given by the court to include prohibition by creditors of further action against the debtor while a permanent trustee is awaiting appointment – this would save court time and cost – an estimated £20,000 to-date in Martin Frost’s sequestration which may eventually need to be recovered from your office.
I look forward to a constructive, reasoned and prompt response.
Yours sincerely
Alan Caine
A 
The Chief Executive
| Mr Alan
Caine Aptdo 108 Puerto Pollensa Mallorca 07470 Baleares Spain |
George House
126 George Street Edinburgh EH2 4HH Phone: 0131 473 4602 Fax: 0131 473 4708 LP-1 Edinburgh 20 www.aib.gov.uk |
18 March 2005
Dear Mr Caine
SEQUESTRATION OF MARTIN FROST
Thank you for your recent e-mails regarding the above case. I have also been asked to respond to your e-mail of 21 February to the Minister for Justice and of 3 March to Scottish Ministers.
I do not accept that the administration of this case has been unduly delayed or that assets have not been safeguarded.
Mr Frost was seeking to have his sequestration recalled. Action to realise assets was suspended pending the outcome of the petition hearing as we judged it appropriate to give Mr Frost assistance to preserve his estate in the event of a successful outcome. To take pre-emptory expensive investigative action would have prejudiced both the debtor and creditors. I understand that the matter has now been put back until October 2005. In view of this I have asked the Agent handling the case to progress the administration in accordance with the Bankruptcy (Scotland) Act 1985 (as amended) but given the circumstances surrounding the estate I do not anticipate a speedy conclusion. The position with regard to Scottish Academic Press will be investigated, as will the competing interests of the sequestration and the Individual Voluntary Arrangement.
As regards the action involving Arakin Ltd, it is not my normal policy to become involved in legal actions begun by or against debtors. My view is that there were insufficient grounds to justify becoming involved in the matter given the potential cost to the case. Consequently I did not become sisted as a party to the action.
On the question of fees, I understand that an appeal has been lodged with the Sheriff against my determination for the first accounting period. This is the appropriate process for assessing the justification or otherwise of fees incurred. The fees for this period are of course considerably less than they would have been had the assets been pursued earlier and I had become sisted to the Arakin action.
Many parties have declared themselves creditors of Mr Frost. As is normal a formal adjudication on claims will be carried out once sufficient funds are realised to pay a dividend. As you know, that stage has not been reached. Once the formal adjudication has been completed the debtor and creditors will be notified of the outcome and will have the statutory right of appeal in terms of section 49 (6) of the aforementioned Act against all or any individual adjudication.
I hope this is helpful in explaining the current position.
Yours sincerely
Gillian Thompson
