Thornycroft case
Investigators have widened their search for large amounts of
equipment and cash linked to the company Thornycroft 1862.
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Administrators of the plant hire company, which allegedly
breached contract by selling assets while on lease, are now
tracking down an alleged “pot of gold” said to exist in Switzerland
and Delaware.
This coincides with efforts by several UK banks and captive
finance companies to recover their equipment, mainly via court
actions in New Jersey where some of the assets are believed to have
been sent.
While at least one US case continues, several have ended before
the launch of a full trial. Others are believed to have got
“repayments” from plant hire suppliers involved in the sale of the
equipment.
Leasing companies said to have leased assets to Thornycroft
include Bank of Ireland, De Lage Landen, Tokyo Leasing and
Caterpillar Financial Services. Some lessors, including JCB
Finance, have recovered all the assets they leased. Also, according
to reports, the main creditor, Barclays, is owed £7.2m, while
unsecured creditors are owed £7.7m.
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By GlobalDataOne source commented: “Investigators are still looking for a pot of
gold either in Delaware or Switzerland. People always wondered what
the end game of this would be and the belief is that the proceeds
are sitting in a bank account in one of these neutral places. I
understood the administrator was pursuing these inquiries through
agents and at one stage was indicating that he was getting
somewhere with them.”
The news comes amidst a growing prevalence of fraud in the European
asset finance industry, coupled with evidence that lessors and
leasing associations are unable to cope with the threat.
Leasing Life research published in this issue reveals that
the leasing industry largely does not have the capability to clamp
down on the sophisticated and broad ranging frauds that occur in
the asset finance industry. Also, there is little organized
collation of fraud data and communication between lessors and their
country representative associations.
Last month the higher regional court of Karlsruhe in Germany
dismissed a €1.1bn claim by 113 banks and leasing companies arising
from the Flowtex scandal. Described as one of the largest frauds in
Germany since the Second World War, the claimants accused tax
officials in the state of Baden-Wurttemberg of covering up
leasing-related fraud at the company. The scandal, which was
discovered in early 2000, is estimated to have caused losses of up
to €2bn.
Legal arguments in the US arm of the Thornycroft case are believed
to have centred around whether good title to leased goods can pass
without the original owner having been notified of the sale. This
could not happen in the UK where the lessor always retain
title.
Pull-out quote: there is little organized collation of fraud
data and communication between lessors and their country
representative associations.
