Bad smell as Connaught Asset Management and Tiuta plc call in administrators

Posted on September 20, 2012

The Action Group has maintained from inception that Connaught Asset
Management and Tiuta plc were trading whilst insolvent. It has taken
the directors a long time, too long; to reach the conclusion that
things just can’t carry on as before.

1. Connaught

Knowing what we now do about Connaught’s amnesiac Chairman Mike
Davies, who would you expect him to appoint administrator of his firm,
which now faces up to £100m of redemption requests from investors? An
insolvency practitioner that a judge found to have perpetrated ‘a
prima facie case of misconduct’, ‘dereliction of duty’ and having
‘misrepresented the true position to the creditors’, no less.

News reached us across the Pond on September 20 that the directors of
Connaught Asset Management Limited have appointed Peter Hollis of KPF
Advisory (a company name that a cynic might suspect was chosen to
sound confusingly similar to the highly legitimate accountancy and
insolvency firm PKF) as administrator. What Davies seems to forget is
that we Americans have Google too (in fact, we invented it!), so it
took us only a few moments to find out that:

 –          In July 2010, Hollis was slammed by a judge for misleading landlords
about the true financial position of Miss Sixty, a fashion chain for
which he and colleague Nick O’Reilly acted in proposing a creditors’
voluntary arrangement (CVA) in 2008. Hollis and O’Reilly failed to
co-operate with the hearing so the judge ordered that the evidence be
sent to their professional body in order that a disciplinary case be

– Hollis was formerly a partner at Vantis, an accountancy and
insolvency firm that went into administration after its banks, mainly
the two taxpayer-rescued ones, withdrew support following accusations
of tax fraud (for which a partner has since been jailed) and
involvement in the notorious Bank of Scotland Reading fraud (the case
for which is about to come to court) and was a participant in a
‘phoenix job’ to create a new business, FRP Advisory, from the ashes
of its precedessor

– Hollis’ involvement in the Miss Sixty case formed the basis of a
Radio 4 ‘File on Four’ investigation broadcast in October 2010

Links to these stories can be found here:
We cheered when we heard that Danny Dartnaill and Malcolm
Cohen, whose conduct in accepting roles as administrators of Tiuta
International resulted in an investor submitting a complaint to their
professional body, were faced with a vote for their removal at last
week’s investor meeting. So we’re not best pleased to find that
Connaught is now in the hands of an IP who has also been the subject
of such an investigation.

We don’t yet know the outcome of the complaint against Hollis – those
quaint Brits at the ACCA wouldn’t tell us over the phone, so we
emailed them – but if the judge’s comments are any guide we’re
surprised he’s still allowed to practice.

We are now campaigning for Peter Hollis to be replaced by investors
with a highly reputable insolvency practitioner who will act in the
best interests of creditors. We encourage all investors who have not
done so to submit redemption notices. As Connaught has to meet the
liability to pay out investors if the Fund does not, investors in the
Fund are the overwhelming creditors of Connaught. We will be
consulting with a wide range of parties over our strategy to remove

We publicly warn Hollis that any failure to secure evidence and/or the
destruction of it will be a matter of the very closest scrutiny.

 2. Tiuta plc

If things could not get worse, then think again. Tiuta plc had to gain
clearance from the FSA to go into administration. We understand that
the FSA has failed to listen to investors who wanted the same
insolvency practitioners to be appointed at Tiuta plc and at Tiuta
International and at the Fund. In fact, the FSA has allowed the
directors to appoint the notorious David Rubin as administrator. The
FSA should have engaged properly with Geoff Bouchier of Duff & Phelps
and Robert Palmer of Gallaghers who are due to be appointed as
liquidators of the Fund and as administrators of Tiuta International.
We need a proper sharing of information so that the full criminal
conspiracy to defraud investors can be exposed. Now we have an
administrator being appointed who is, to say the least, not noted for
looking into wide scale false accounting and criminal conduct.

All of the alleged assets of Tiuta plc almost certainly belong to the
Fund. As we have explained before on this website, Tiuta plc borrowed
monies from the Fund for one purpose but used it for another.  Until
very recently, all of the money lent by the Fund was paid into the
bank account of Tiuta plc. The Action Group believes that many
millions of pounds has been stolen from the Fund by Tiuta plc. The
Action Group believes that Tiuta plc in effect holds assets on trust
for the Fund.

 There has been an attempt to avoid Tiuta plc’s obligations to the
Fund. Investors were shocked to learn recently that a deal had been
done whereby inter-company balances in the Tiuta Group were written
off. This allegedly happened just before the sale of Tiuta
International to Tiuta plc. The significance was not lost on
investors. The Fund allegedly lent monies to Tiuta International, which
permitted Tuiuta plc to borrow/steal the cash. Tiuta plc was then
released from the obligation to repay the monies. We understand that
Tiuta plc recently resisted payment under the new 2012 guarantee in
favor of the Fund on the grounds that Tiuta plc no longer owed any
cash to Tiuta International. We assert that the writing off of
inter-company debts involves preferences that can be set aside and
cannot nullify the trust that was created. We also assert that there
was wide scale false accounting at Tiuta plc and so it will take some
time to reconstitute the proper books of account from the bank

 3. The FSA

We call upon the FSA to fire the official who sanctioned the
appointment of David Rubin. Once again, the regulator has forgotten
about its primary statutory duty to protect investors. The FSA still
thinks that the problem lies with wealth managers and IFAs who
mis-sold the Fund to investors. Wake up at the FSA. There has been
fraud on an industrial scale at Tiuta plc and this has led to
substantial losses for investors. The directors have chosen David
Rubin due to the reputation of that firm which has nothing to do with
the interests of investors/creditors.

Bad eggs coagulate and stink to high heaven. Hold your noses: Hollis,
Rubin and the official at the FSA are bad eggs.

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