Duff & Phelps (2) v Mike Davies (0)

Match report on clash at Birmingham

At the meeting of investors in the Connaught Income Fund held on 13 August 2012, Duff & Phelps (acting for the Fund) flatly contradicted claims by Mike Davies that Connaught had proper procedures to safeguard the interests of the Fund.

Duff & Phelps pointed out:

(1)  It appears that there was “recycling” (where Connaught failed to put themselves in a position to check when loans had been repaid to Tiuta International by third parties which provided the opportunity for Tiuta to help itself to the cash). The Fund was left with no security over property and the cash was allegedly misappropriated.

(2)   It appears that there was diversion of cash (where Connaught failed to ensure that the monies lent to Tiuta International was applied to the loan propositions approved by Connaught on behalf of the Fund and thus Connaught failed to ensure that the Fund’s interests were secured with first fixed charges over land or property and this enabled Tiuta to help itself to the cash).

The clash won over many investors at the meeting into believing that for the first time in this saga, a firm of professional advisers was standing up for their interests. Many investors expressed doubts over supporting players in the Duff & Phelps team. SJ Berwin’s presentation clearly failed to impress investors. A street-wise insolvency lawyer from Birmingham called Nyla Yousuf and her boss David Fletcher at Farrer & Co were mentioned as credible replacements. Also, some investors expressed the view that the Duff & Phelps team could be strengthened with the appointment of a market professional in the short term lending market on a consultancy basis.  Steve Green of Graf Mortgage Corporation was mentioned by some as the right man for the job.