Investor succeeds in bid to wind up FreshStart Living

MANCHESTER property developer FreshStart Living is to be wound up after a successful petition by an investor.

It comes days after the firm’s business practices and track record were put under the spotlight in a high profile report on the BBC’s The One Show.

The business, set up in 2009 and groomed for a stock market flotation 18 months ago, has been dogged by complaints from tenants and legal action by investors.

It was the main trading company of a group which typically holds property assets in special purpose vehicles. Its parent, Empirical Property Group, is still trading. Director Charlie Cunningham said a company voluntary arrangement deal (CVA) was rejected by creditors, but it hinged on the outcome of a potential legal case.

Roger Walters, chief executive of Supercity UK which operates three aparthotels in London, took action against FreshStart over a £20,000 deposit he paid on 10 flats at a proposed FreshStart student scheme in Nottingham.

The company was planning to convert a 30,000 sq ft office building at the Victoria Shopping Centre into 157 student apartments in time for the 2012-13 academic year, but it has still not completed the deal to buy the building.

Capital Shopping Centres, now called Intu Properties, did exchange subject to planning consent, but FreshStart’s application was withdrawn earlier this year.

Mr Walters told TheBusinesDesk.com he does not expect to recover any cash from the action which concluded in London yesterday. The most recent abbreviated accounts for the year to July 2012 show the company had net assets of £264,000.

He said: “There’s not a chance in hell of recovering money but I wasn’t going to let these guys carry on. My next aim is [parent company] Empirical Property.”

FreshStart launched a number of schemes across the country several years ago, marketing them cheaply to buy-to-let investors and promising good returns. Many were advertised as “student pods” – a student room for under £30,000 with guaranteed rental income for several years.

TheBusinessDesk.com has previously reported on problems at other Freshstart schemes, with the fire service intervening on safety grounds in Bradford, Stockport and Paisley in Scotland. Investors have previously sued over the failure to return deposits at schemes where work did not start, or was never completed.

A recently-filed report by administrators of FSL Properties Trafford Press, the FreshStart vehicle which owned the Trafford Press scheme in Manchester, revealed how 22 tenants were living in a building with no mains electricty or permament water supply. They were evacuated by the administrators who also said there were inadequate fire and safety measures, exposed electric wires, “severe problems” with the roof, defective window frames and no building regulations approvals for common areas.

FreshStart was set up by Salford-based Andrew Camilleri who was declared bankrupt in 2011 over property loans totalling £9m, including interest. One of his relatives, Alan Pierce, holds most of the shares in parent company Empirical.

FreshStart’s sole director is Charlie Cunningham who also holds 10% of the Empirical shares. He has a background as a City broker and was drafted in last year to prepare FreshStart for a stock market flotation. He is also an Empirical director along with construction chief Phillip Wright, and Christian Yates who works as an adviser at City investment firm Shore Capital.

Mr Cunningham told TheBusinessDesk.com in September that the root cause of the group’s problems stemmed from issues with the Trafford Press, and claimed a law firm had made mistakes with contracts that led to sales falling through. He said this caused funding problems and drained cash from Empirical, which put £1.3m into the Trafford scheme. Leonard Curtis has instructed Irwin Mitchell to look at a £5m legal action against the law firm which has not yet been named.

In a statement Mr Cunningham said: “Fresh Start Living Ltd was the administration centre for the Fresh Start group of companies but came under significant financial pressure as a result of the failure of the Trafford Press development which is now subject to a multi-million pound professional negligence claim.

“The major creditors are HMRC and the Empirical Property Group. The directors of Fresh Start Living Ltd made a CVA proposal to creditors of 100p in the £1 to be paid on the successful conclusion of the professional negligence claim.

“This proposal was approved by 71% of creditors but was rejected by HMRC and therefore the CVA was rejected. As a result, the directors were unable to prevent the winding up of the company and will now work with the liquidators to achieve the best possible result for all creditors.”