Fire Brigades Union

Fire Brigades Union

July 08, 2011 07:39 ET

Fire Crisis-Owners of London and Lincolnshire Fire Engines Will Go Bust on Monday If Takeover Deal Fails

LONDON, ENGLAND--(Marketwire - July 8, 2011) - AssetCo, the owners of London and Lincolnshire's fire engines, will go under on Monday owing a staggering £140million to creditors, unless a take over deal is agreed in the next 48 hours, a registrar's hearing was told on Thursday evening. The Fire Brigades Union warned that fire engines could be seized by creditors and sold off to recover the debts if the company goes under.

AssetCo owns all London fire engines and 50,000 pieces of safety and rescue kit and leases them back to the fire brigade. It does the same in Lincolnshire.

In an extraordinary move in advance of Monday's Companies Court hearing to examine the company being liquidated or going into administration, directors of AssetCo, lawyers, and investment bankers sought to grab £86,000 in fees before the company went bust.

Matthew Parfitt, the lawyer acting for AssetCo, revealed that lawyers and investment bankers working on potential take over bid said they would "down tools" or "down pens" on saving the company unless the Registrar, Mr Briggs, validated fee payments immediately.

He said two directors, Tudor Davies and Tim Barrett, threatened to quit the company today (Friday) unless the court authorised payments of £25,000 for a week's work and up to £1000 for expenses for hotel bills and meals. It was revealed Mr Davies is charging AssetCo £3000 a day for his work and Mr Barrett £2000 a day.

Mr Adam Goodison, acting for creditors Northern Bank, owed over £1.3m, revealed the figures, when he opposed any move to pay out the cash. He speculated whether there was "panic among the professionals working for the company" that had made them seek this order. Other creditors were sitting in the Room 412 at the High Court to observe what was happening to their money.

Mr Briggs described Assetco's submission as "extremely unattractive" and agreed with Mr Goodison that the company was putting "a gun to the head of the court" by threatening to "down tools" unless they received "a substantial amount of cash."

He refused to authorise the payments saying he "hoped the gun will now not go off." Instead he adjourned any decision to Monday's hearing which stopped directors getting preferential treatment.

The scale of AssetCo's woes was revealed in a submission from Mr Parfitt acting for the company. They show that on Monday it could go down owing between £117m and £140m.

Among the major new creditors are state owned Halifax Bank of Scotland which is owed £12m and energy company, EDF, which suggests AssetCo may not have paid fuel bills for premises they run in London. Others include FD Direct and the Inland Revenue.

There was one unnamed bidder still said to be in advanced talks. Mr Parfitt said the deal would mean all creditors would be paid in full, all bank loans restructured and the company recapitalised. Mr Briggs queried why in these circumstances the company had not given in confidence details of the bid to the court - which happens in similar cases- so the court could decide itself.

Mr Goodison for Northern Bank detailed the demands for payment. They included a £25,000 flat weekly fee from a foreign investment bank which will get hundreds of thousands of pounds from a success fee if it goes ahead and £36,000 to a firm of solicitors that has drawn up the plan for administration.

Matt Wrack, FBU General Secretary said: "AssetCo is on the verge of collapse. The demands the directors and advisors made to the court beggar belief.

"The London and Lincolnshire fire brigades do not own their fire engines and kit and are in crisis because they privatised all of their operational assets. Both brigades, the Mayor of London and Government have shown extraordinary complacency.

"The entire operational assets of both brigades could be seized by creditors and sold off in full or in part. Neither brigade appears to have any fallback plan of any credibility.

"The foolish decision to privatise all fire engines and kit leaves them sitting on the sidelines with no power over what happens to their critical operational assets.

"What was put before the court is a public scandal and makes clear in whose interest private companies work. Yet the only people making an issue out of it are the firefighters on the ground who do care about what happens and the impact it could have on public safety.

"There must be an end to privatisation in any critical emergency service. You cannot run a fire service alongside the private sector in this way, it's crazy."

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