Administrators sued for multi-million sale at undervalue of London property

The Particulars of Claim alleged that the administrators Binder Dijker Otte (“BDO”) had failed to obtain a proper valuation for the the One Blackfriars building site, nicknamed the “Boomerang” in 2010 at an undervalue when they could and should have pursued the second objective of achieving a better result for the creditors. Joint liquidators were appointed in 2016 and commenced a claim that BDO had acted in breach of their duties in negotiating and effecting the sale of the site.

A five-week trial of liability and damages issues is currently on-going in this matter and we shall provide an update upon the judgment being published.

Do you have a claim against a professional? If you want expert legal advice, do not delay in instructing us so we can assess the legal merit of your case.

We can often take on such claims on a no win no fee basis (such as a Conditional Fee Arrangement) once we have discussed the claim with you and then assessed and advised you on the merits of the proposed professional negligence action.

Our expert legal team of leading Professional Negligence Solicitors & Barristers can provide urgent help, advice or representation to you. Just call our Professional Negligence Lawyers on 02071830529 or email us now.

What is the background to this matter?

In 2010 BDO became the administrators for One Blackfriars, which at that time had planning permission for 64 luxury apartments and a 261 bedroom hotel. BDO sold this site for £77.4million to the Berkeley Group, who valued the site 18months later for £232million.

The liquidators of the company, Adrian Hyde and Kevin Murphy, have since accused BDO of negligence in their role as administrators of the Boomerang, stating that it was clearly sold at undervalue.

Higher offers for the Site were rejected or ignored, bidders were encouraged to bid at the level of the secured debt, and little or no attempt was made to encourage competition between bidders to come up with increased offers or to negotiate robustly with bidders on an informed basis.

Adrian Hyde

The applicants in this matter applied to adjourn the trial due to Covid-19 in April, however this was refused by the High Court, with John Kimbell QC stating that the parties should prepare for trial, which would be heard remotely.

What are the allegations against BDO?

Under the Insolvency Act 1986 Sch.B1 para.3(1), the administrators had to perform their functions with the objective of, in order of priority:

  • rescuing the company as a going concern;
  • achieving a better result for the creditors as a whole than would be likely if the company had been wound up; or
  • realising property to make a distribution to secured or preferential creditors. The company’s sole asset was a site with development
    potential.

BDO decided that the only objective that was reasonably practicable was to realise the property to make a distribution. The site was sold in 2011 for £77.4million.

Adrian Hyde and Kevin Murphy, the joint liquidators, were appointed in 2016 and a year later they applied to commence a claim that BDO had acted in breach of their duties in negotiating and effecting the sale of the site.

The particulars of claim alleged that the administrators had failed to obtain a proper valuation and had sold the site at an undervalue when they could and should have pursued the second objective of achieving a better result for the creditors.

At the trial in June 2019, the liquidators sought to amend the particulars of claim to allege that the administrators had negligently failed to pursue the preferred first objective of rescuing the company as a going concern.

Such action was time-barred under the Limitation Act 1980 and CPR r.17.4 if the amendments amounted to a new claim, unless the new claim arose out of the same or substantially the same facts as were already in issue. The liquidators submitted that, given that claims in insolvency proceedings began with application notices, the court could go beyond the particulars of claim and look back to their application for the purposes of determining whether the amendments were a new claim.

They submitted that the court would then see that they had previously raised the issue of the administrators’ failure to pursue a rescue of the company, and therefore it was not a new claim. Alternatively, they submitted that the amendments arose out of the same facts already in issue.

However, the court disposed of this application as they held they did not have discretion to allow the amendments of s.35 of the Limitation Act 1980.

A five-week trial of liability and damages issues is currently on-going in this matter and we shall provide an update upon the judgment being published.

Book an Initial Consultation with our Professional Negligence Lawyers

Do you have a claim against a professional? If you want expert legal advice, do not delay in instructing us so we can assess the legal merit of your case.

We can often take on such claims on a no win no fee basis (such as a Conditional Fee Arrangement) once we have discussed the claim with you and then assessed and advised you on the merits of the proposed professional negligence action.

Our expert legal team of leading Professional Negligence Solicitors & Barristers can provide urgent help, advice or representation to you. Just call our Professional Negligence Lawyers on 02071830529 or email us now.

Instruct Specialist Professional Negligence Solicitors

We are a specialist City of London law firm made up of Solicitors & Barristers operating from the only law firm based in the Middle Temple Inn of Court adjacent to the Royal Courts of Justice. Our team have expertise in advising on claims for compensation against professionals that have fallen below the standard expected, which causes clients financial or personal loss. We are experienced in bringing successful claims against negligent solicitors, barristers, financial advisers, surveyors, valuers, architects, tax advisers and IFAs.

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