Administrators chase Smooth Financial loans

THE administrators of defunct debt management firm Smooth Financial are still chasing the shareholders for allegedly outstanding director loans, despite a court setting aside some of the claim.

Around 50 staff lost their jobs at the Sale-based firm when it collapsed in July 2013 with an £850,000 hole in the client account. The money had been paid by people with debt management plans with the expectation it would be passed to creditors, minus a fee.

Instead, administrators at Royce Peeling Green in Manchester found it had become mixed up with working capital and used to keep the business going.

Smooth’s owners, Mark and Josephine Broadstock, have previously told administrators that there are no outstanding director loans, despite an earlier report suggesting £158,000 was owed. The administrators issued statutory demands earlier in the year which the Broadstocks applied to have set aside, with some success in June.

However, in a late July progress report, administrator Alan Coleman said: “My investigations revealed there are overdrawn directors loan accounts, which I am seeking to recover for the benefit of the company. The directors have disputed that any sums are due.

“I am continuing to pursue this matter with the assistance of my solicitor and I am optimistic of a recovery. As this matter is an ongoing legal matter we are unable to provide any further information to creditors at this stage. However, we have reported to the creditors committee recently on our progress.”

A statement issued by the Broadstocks’ lawyer, Thomas Hall of Simon Burn Solicitors in Cheltenham, said the demand against Josephine Broadstock had been set aside and the “majority of sums” allegedly due from Mark Broadstock were also cancelled.

Mr Hall said: “Mr & Mrs Broadstock applied to the court to have the statutory demands set aside that were served on them by the administrators of Smooth Financial Consultants Limited. The matter was heard on June 27, 2014.

“The statutory demand served on Mrs Broadstock was set aside in its entirety. It was determined by the court that she was not liable to Smooth Financial Consultants Limited for any of the sums allegedly said to be due on her director’s loan account.

“As for the statutory demand served on Mr Broadstock, it was determined by the court that he had some liability to Smooth Financial Consultants Limited for sums claimed on his director’s loan account. The majority of the sums allegedly said to be due from Mr Broadstock on his director’s loan account were set aside by the court. Mr Broadstock is not prepared to comment on matter this further at this juncture as he is engaged in ongoing negotiations with the administrators of Smooth Financial Consultants Limited.”

The administrators have also issued winding-up petitions against three associated companies in a bid to claw back cash.