FreshStart faces class action over Montgomery House
A SUBSIDIARY of Salford buy-to-let specialist FreshStart Living is facing a class action after a judge allowed 70 of its investors to join a winding-up petition.
They will now be named on a petition against FSL Properties Montgomery, a FreshStart arm set up to buy Montgomery House in south Manchester and turn it into student flats.
Individual rooms were sold to investors who were incentivised by the promise of guaranteed rent payments. The investors say they are owed £200,000 but FreshStart argues it is more like £135,000.
The move follows a winding-up petition brought by one investor in January over a debt of £4,000. This was settled on March 15 ahead of a hearing on March 18.
In court barrister Carly Sandbach said she wanted to substitute the original petitioner’s name with those of 70 supporting creditors so they could pursue their case against the company.
She said: “There’s no limit [to the number of names on a petition] and it’s absolutely appropriate given the number of creditors affected by the conduct of this company.”
Representing FreshStart, Richard Wright, fought the application, saying only one name should be substituted as Judge Charles Khan did not have the jurisdiction to add so many.
He added: “It ought to be dismissed as there’s a genuine dispute as to the debt. Or send it off to a contested debt hearing… The company feels the court has been given an unfair impression. This arose from a series of separate contracts and the parties disagree as to how they should be interpreted.
“The parent company has always made it clear that it’s entirely willing and able to pay what’s genuinely owed on these contracts.”
Judge Khan said there was “no jurisdicational reason” why he should not make the order to substitute the names. The case has been adjourned until April 22.
