Ex-i3 Group can only pay fraction of £12.3m debt
ADMINISTRATORS appointed to the former i3 Group say that it is only likely to repay around 1.4p in the £1 to creditors owed £12.3m.
This means that its scandal-hit former subsidiary H2O Networks is only likely to recover a fraction of the £11.6m it was owed.
I3 Group, which was owned by Elfeld Thomas, installed broadband cables through existing sewer networks. It hit trouble following a fraud investigation launched into its Daresbury-based funder Total Asset Finance in November last year.
The Serious Fraud Office were called in to investigate contracts between H2O Networks and Total Asset Finance, which had been used by Total Asset Finance to draw down money from its bank, KBC Lease UK.
Thomas sold H2O Networks and a number of other subsidiaries to i3 Group’s former chief operating officer Greg Mesch in January, but when Total Asset Finance collapsed in February, H2O Networks followed in April.
Its administrator, PwC, agreed a deal with Mesch and its other directors to buy the company back through a “pre-pack” deal, which Mesch said had been carried out with the support of KBC.
The new joint administrator’s report for i3 Group found that it was unable to repay the £11.6m it owed to H20’s administrators, and a deal was struck to sell the business and assets of i3 Group – including its trading name and subsidiary companies i3 International and Fibre Associates – to Mochdre Ltd in a deal worth £188,000 plus shares in Mochdre before placing the group into administration.
The directors of Mochdre Ltd are Mr Thomas and his finance director, Michael Norris.
Mr Norris told TheBusinessDesk.com that the shares in Mochdre are the key asset of the old business as it gives the administrators “a major interest in the shares of the ongoing i3-Group”.
“This was a recommendation of an independent review carried out by a major firm of accountants and takes into account the further investment in time and money needed to generate value from the early stage businesses which i3-Group has purchased,” he said.
He added that the £188,00 paid for the assets of the former group (now renamed Earlestown Technology) were independently valued by a chartered surveyor.
“It is also worth noting that the debt of £11.6m to H2O Networks Limited was a consequence of the way the various subsidiaries of Earlestown Technology Group Limited had historically been funded,” he said.
“With the preservation of over 40 highly skilled jobs I believe that the hard work and determination of the i3-Group team can deliver significant value to all stakeholders in the long term.”
