August 27, 2010 10:52 pm

Polly Peck creditors look to recoup £375m

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Asil Nadir faces the prospect of fresh legal action to recoup up to £375m claimed by his personal creditors following his return from northern Cyprus to the UK on Thursday.

The businessman who built Polly Peck, the fruit-to-electronics conglomerate that was a stock market darling in the 1980s, is set to attend a preliminary hearing next Friday ahead of a trial on 66 criminal charges of theft totalling £34m.

His return has also rekindled efforts by insolvency professionals who two decades later are still seeking to recover the vast majority of more than £2bn in debts left by the collapse of Mr Nadir’s corporate empire in 1990. Creditors have received little more than £70m to date.

Kevin Hellard, a partner with Grant Thornton who is running Mr Nadir’s personal bankruptcy, told the Financial Times he would be seeking to meet Mr Nadir to push for a settlement. “Clearly now he’s back in the UK there will be a momentum to bring the case to a close. I’m interested in what he has been doing in northern Cyprus, his proposed business interests and how he has funded his lifestyle.”

Mr Nadir remains an undischarged bankrupt, and those working on behalf of creditors say they can seek to seize even those assets acquired or generated since his bankruptcy in 1991 and his unauthorised departure from the UK 17 years ago.

Mr Hellard said he was studying reports that Mr Nadir had business interests and had led an “opulent” lifestyle in northern Cyprus. He noted his return to the UK on a private jet, his rental of accommodation in Mayfair at £20,000 a month, and his bail of £250,000, as well as payment of legal and other professional advisory fees.

Since 1991, he said he had been able to secure and liquidate less than £1m in assets to pay off creditors owed £375m by Mr Nadir personally, including the UK tax authorities and a range of banks.

The largest claim is from a group of creditors of Polly Peck, the holding company, which went into administration in 1990. Partners at PwC and Deloitte handling the case estimate that £263m went to Mr Nadir or companies he controlled.

Their analysis suggests that, out of £2bn in debts, about £500m went from Polly Peck to companies or bank accounts in northern Cyprus and Turkey, where the creditors have failed in long-running legal actions to claim the money.

They have recovered about £210m across the group, most from the sale of foreign businesses in the Polly Peck group including Del Monte, Russell Hobbs and several hotels.

Much of the rest of the outstanding debts went to support lossmaking operations, and reflected acquisitions that could only be sold at a loss.

Only a little more than £70m has been paid out to creditors of Polly Peck. Nearly £130m has been paid to accountants, lawyers, tax authorities and other expenses.


Realist accepts loss of investment


Writer Nick Chrimes, 60, bought into Polly Peck in 1985 after encouragement from his Turkish Cypriot wife, writes Szu Ping Chan. His investment was at one point worth more than £15,000 – or nearly £27,000 in today’s money.

“People said to me, how can you make money from people packing oranges?” he recalls. “But as far as I was concerned, Polly Peck had other higher tech businesses, such as making electronics and toasters.”

But Mr Chrimes’ shares were wiped out in a matter of days in 1990 as a mass sell-off forced the company into administration.

“I felt bemused at the time, because at the beginning of that year financial pundits had put forward Polly Peck as an absolutely solid blue chip company,” he says. “There was nothing I could do about it. You can kick the cat, but what good does that do?”

Despite the concerns about how Polly Peck was run, Mr Chrimes says he is now more curious about Asil Nadir’s motives for returning to England, rather than cherishing any hope of recovering his lost money – the episode is all water under the bridge, he says.

“I can’t say I’m bitter. If I’d lost my job and had to sell my house as a result, it would be different. But there’s no logic in any other emotion, because it’s so far in the distance, and to be honest you shouldn’t have been investing in a group like Polly Peck if the money was absolutely critical.”

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