Administrator has been investigating the conduct of directors and has submitted a report to government department
Administrators are investigating the conduct of an insolvent wholesale broker’s directors and how they handled financial accounts.
Orbit Underwriting’s principal director Stuart Lowe and former finance director Lee Stevens were both included in a lawsuit against the firm by its former underwriter XL Catlin.
It was claimed motor broker Orbit owed £800,000 to XL Catlin in unpaid premiums. Court filings accused Orbit of moving funds held in trust for XL Catlin from a premium account to an Orbit business account, and to Lowe himself.
The filings alleged that Lowe, who owns 75% of Orbit, kept the money for his personal use. Stevens was accused of authorising the money transfers.
The case has since been stayed in the high court, with a settlement understood to have been recently reached. The administrators report, published last month, stated that a “suitable offer of settlement is imminent”.
Investigation
But within the report, which covers the period up to 1 May this year, it detailed issues still being investigated by the administrator.
It revealed he has submitted a report on the conduct of Orbit’s directors to the Department for Business, Energy, and Industrial Strategy, under the Company Director’s Disqualification Act.
“The main issue in respect of the case has been the misappropriate use by the company of funds held in trust on behalf of the insurance underwriters,” the administrator said.
The amount held in the trust account as of 1 May was given as around £80,000, but the administrator said he is seeking legal opinion on how this account was run.
“This has been necessary as the trust account was not operated in the correct manner by the company and there is no clear reconciliation of funds paid by brokers and funds remitted to the underwriter,” the administrator said.
And while the report states that “agreement in principal has been reached in respect of the litigation”, the administrator said there is still one outstanding investigation.
Uncertain amount
The report lists a director’s loan taken by Lowe for an ‘uncertain’ amount.
However, a document filed in March puts the book value of a director’s loan at £681,000, of which £300,000 was estimated to be realised.
The administrator said in this June report that the financial position of Lowe was under review, with the matter linked to the action taken by XL Catlin. But he said the intention was to agree a “suitable repayment option”.
The administrator also highlighted a disputed amount owed to Orbit by The Data Analysis Hub - a firm Lowe also owns and of which Lowe and Stevens are also directors.
According to the administrators report, XL Catlin is claiming for £1.03m of funds paid by Orbit’s brokers, including damages, in its capacity as a trust creditor. The administrator has received a similar claim for £145,000 from Gibraltarian insurer Mulsanne.
The administrator had received claims totalling £441,000 from another 13 unsecured creditors. Another £131,000 could be owed to creditors, according to the company’s statement of affairs, but this has yet to be claimed.
Total claims could reach around £1.7m according to the report, but only around £100,000 has so far been realised in assets available to the company. The costs of administration are put at £170,000, with solicitors costs making up around £65,000 of this fee.
Other than Orbit Underwriting and The Data Analysis Hub, Lowe is currently listed on companies house as a director of two other companies - Resolution Agencies and Orbit Premium Finance. Stevens is also listed as a director at these firms, along with of Stevens Taxation Services, and Interropix.
Both Lowe and Stevens had resigned from Orbit Underwriting on 12 September 2018 according to companies house, with Lowe returning on 24 September - the same date the XL Catlin lawsuit was filed. Orbit Underwriting entered administration on 2 November 2018.
No comments yet