Businessman cries ‘foul’ after Catalyst collapse
A PROPERTY developer who made a £200,000 payment to collapsed Manchester lender Catalyst Securities to facilitate a £3m loan which he never received claims he was misled about the state of its finances.
Altay Ali, a property developer who ran Bella View Homes in Cornwall, had initially borrowed more than £385,000 in late 2007 in bridging finance from Catalyst Securities as replacement funding on a site originally purchased in 2006, but the ensuing banking crisis and the collapse in property values left him unable to secure the development finance needed to bring the schemes forward and unable to repay the loans.
Mr Ali claims that he was then approached by an agent in February 2010 who told him that Catalyst Securities had £12.5m to lend.
Following a subsequent meeting with Catalyst’s director Rod Black, who ran the business alongside financier Richard Hughes, a formal offer of a £3.05m loan was made to Mr Ali on April 7 last year to redevelop a former coal yard at Merrimold, near Devon and a farm at Launceston in Cornwall.
Mr Ali was asked to advance £200,000 prior to the drawdown of the loan, which he borrowed from his mother and then transferred to Catalyst a fortnight later.
“I was told the £3m would be available within three weeks,” he said. “We handed over £200,000 and we never heard anything from them.
“I’m not even sure where the money went.”
Catalyst Securities was eventually placed into administration on April 21, 2011, with Paul Dumbell and Brian Green from KPMG appointed as joint administrators of the company.
A recently-filed report by administrators KPMG states that the company had made 269 bridging loans since it was set up in 2003 but once it breached its banking covenants in October 2008 – 18 months before the offer was made to Mr Ali – it “had no funding to make new loans”.
The report said that the remaining period was largely spent recovering its outstanding loan book – in some instances by appointing LPA receivers over assets on which it held security. The collapse of a subsidiary fund in September 2010 eventually led to KPMG’s appointment in April.
KPMG’s administrators have subsequently appointed Law of Property Act receivers to repossess the former coal yard site owned by Mr Ali over which Catalyst had a legal charge. David Currie & Co, now part of Winterhill Group, has been appointed as LPA receiver.
TheBusinessDesk.com contacted Catalyst Securities’ former directors but were told that all enquiries regarding the firm were now being handled by administrator KPMG.
A spokesperson for KPMG said administrators were “aware of Mr Ali’s assertions and are attempting to establish the facts”.
A statement of affairs prepared by directors for KPMG showed that Catalyst owed Barclays £10.6m, but that its loan book is only likely to recoup £5.5m, meaning the bank faces a shortfall of more than £5m.
Bank of Scotland holds a separate charge over a portfolio of four apartments in Manchester in respect of a £920,000 loan, but the properties are only expected to be worth £580,000.
