Fees of €2m paid to firms bought just before Treasury liquidation
TWO companies controversially sold to developer Richard Barrett just ahead of the liquidation of Treasury Holdings have been paid €2m in fees for managing properties in China.
The sale of the two companies last August was controversial because they were bought by Mr Barrett from Treasury Holdings, a company he part-owned, at the same time as KBC Bank was trying to have the business shut down for failing to repay property loans.
The companies, Treasury Holdings Real Estate Pte and Treasury Holdings (Shanghai) Property Management Co Ltd, were bought by Mr Barrett's Jersey-based company, Oriental Management Services Ltd.
Mr Barrett has always insisted the deal was done so that the liquidation of Treasury Holdings here would not affect the separate but connected Treasury China Trust (TCT) property business in Asia, which has now changed its name to Forterra Trust. Mr Barrett is also a substantial shareholder in Forterra.
However, as well as the timing of the deal, questions were also raised by Treasury Holdings creditors about the amount he paid for them.
At the High Court last October, Judge Brian McGovern said there appeared to be "a significant issue" that the sale of the two Treasury-linked Chinese companies to Richard Barrett could have been "at a significant under-value."
That was after lawyers for KBC Bank said that the €2.63m price paid by Mr Barrett was well short of an apparent valuation of €38m calculated only months earlier by Goldman Sachs.
The judge said the liquidators of Treasury Holdings Michael McAteer and Paul McCann were mandated to look at the deal as part of their winding up of Treasury, including examining whether or not it should be reversed.
Financial accounts published by Singapore-listed property TCT show it paid the equivalent of €2.1m to the two companies for managing property developments in China in 2012.
That was up from €1.9m the previous year.
The two profitable companies earn the fees for managing Forterra's multi-billion property empire, including paying staff and other running costs.
Liquidators have the power to reverse the sale of a company's assets completed before the liquidation, if they find that the price paid was too low.
If assets are sold and the price was fair then the sale must be allowed to stand.
In the case of the Treasury Holdings liquidation, the process to assess whether Mr Barrett paid the correct price is still ongoing, according to the liquidators.
In the meantime the sale stands, and the fees are paid to the business as usual.