EXCLUSIVE by DOUG COLLIE
The bankrupt investment fund chosen by Borders councillors to bankroll a £21 million waste management project does not even have enough money to pay the liquidators who are investigating the activities and conduct of its managers, it has been revealed.
New Earth Recycling & Renewables [Infrastructure] Plc (NERR) was supposed to have been subjected to rigorous financial screening by Scottish Borders Council and its expensive advisers during the planning of a "state-of-the-art" biological and incineration plant as part of a £80 million contract signed with Dorset-based New Earth Solutions (NES) in 2011/12.
As Not Just Sheep & Rugby has pointed out, many of the elected members of Scottish Borders Council (SBC) who will be seeking re-election next month, sanctioned the useless deal which collapsed in disarray in 2015 after costing council taxpayers £2.4 million.
The local authority has repeatedly refused to divulge information about their dealings with NES and its Isle of Man investment "branch" NERR, citing commercial confidentiality even though all of the businesses involved in the useless contract are now insolvent with debts running into hundreds of millions of pounds.
Various firms of experts in the art of liquidation and administration have warned shareholders and investors in NES, NERR and the controlling Premier Group (Isle of Man) which has also gone belly-up that they are unlikely to get much if any of their money back. The NES dividend is forecast at between four and eight pence in the pound.
In an update on the "complex" winding up of NERR issued this week, Alex Adam, the fund's joint liquidator has told creditors that "due to the lack of readily available assets in the liquidation estate, the Isle of Man Financial Services Authority is providing funding by way of a loan to the joint liquidators to meet the costs of the liquidation".
Yet this is the fund which managed to string SBC along from 2011 to 2015, promising to pay for the waste management facility at Easter Langlee, Galashiels. NERR's controllers and promoters coined in lucrative 'management' fees while the investment entity did nothing to progress the Borders project.
The latest progress report from Mr Adam states: "As you are aware, this is a complex matter requiring information to be obtained from a variety of sources relating to a period of several years.
"Since our last update we have focussed on identifying specific issues which warrant further investigation with the objective of determining whether a claim could be brought against one or more third parties. Following that review and discussion with our legal advisers we are in the process of conducting a detailed assessment of one such issue.
"However, we do not wish to prejudice any potential claim by providing further detail at this stage. For the avoidance of doubt, this does not mean that other possible claims have been discounted but only that we are focussing on what we consider currently to be the issue with the greatest prospect of success, that is, cash receipts into the Company".
Mr Adam warns that the funding arrangement for the liquidation with the Manx FSA is subject to continuous review and can potentially be withdrawn at short notice.
He adds: "However, we have maintained dialogue with the FSA throughout the period with respect to the progress of and strategy for the liquidation and, for the time being, the funding arrangement remains in place to allow the investigations to continue".
Mr Adam anticipates providing a further update for investors and creditors in September.
Not Just Sheep & Rugby feels justified in asking yet again for details of due diligence and solvency checks conducted by SBC and by the firms of specialist lawyers and financial experts they commissioned before deciding NES and NERR were the answers to their environmental prayers.
Our view is that a firm which cannot even afford to pay for going bust should never have been allowed anywhere near a £80 million roast dripping with public money. It troubles us deeply that an investigation has not been held into the four-year relationship between SBC and a consortium of cash-strapped businesses incapable of delivering on promises made. Of course, it is never too late....