Lessors face almost total losses on their exposures to Global
EPP after an auction of the plastics manufacturer’s assets raised
just £1.5 million (€1.6 million).

These sale proceeds, which will be divided among the lessor
creditors, fall far short of the £64 million paid in total to the
Leicester-based company.

Other money from Global EPP is likely to be raised from the sale
of non-leased assets, such as company cars and unexpired property
rentals. However, lessors targeting this cash will do so as
unsecured creditors and therefore will rank equally with trade
creditors and tax authorities. Sources said that the dividend for
unsecured creditors is likely to come out well below 10p in the
pound.

Global EPP entered administration at the end of 2007 after
allegedly receiving multiple financings on single assets from a
large number of lessors, including Lombard, Lloyds TSB and Siemens
Financial Services.

None of the leased equipment could be repossessed by individual
lessors, since all the serial numbers had been erased to facilitate
the alleged multiple financings.

The lessors are due to agree early in 2008 on the basis for
dividing the equipment sale proceeds among themselves.

It is understood that Price-waterhouseCoopers (PwC) is pursuing
civil recovery claims against individual ex-directors of Global
EPP, including the one subject to the ongoing criminal fraud
investigation by Leicestershire Police.

It is now clear that lessors will have suffered almost total
losses on their exposures to the Leicester based plastics
manufacturer EPP Global.

The company collapsed towards the end of 2007, following a
series of multiple financing frauds on equipment leases.

There will be two stages in the final recoveries by lessors from
the insolvency.

Firstly the sale proceeds of the equipment to which the lessors
had claims will be divided among them. For the remaining balance of
their claims the lessors become unsecured creditors, ranking
equally with trade creditors and the tax authorities, in the final
dividend after the liquidation of other assets.

None of the leased equipment could be repossessed by individual
lessors, since all the serial numbers had been erased. The machines
were therefore sold as a single lot by the administrators from PwC.
It is understood that less than £1.5 million was raised from the
sale.

This compares with the lessors’ claims, based on contractual
settlement amounts when lease rental accounts went into default, of
some £64 million. The lessors are expected to agree early in 2009
on the basis for dividing the equipment sale proceeds among
themselves.

The final resolution of the insolvency will take much longer,
but it seems that the dividend for unsecured creditors is likely to
come out well below 10p per pound.