No fewer than 27 leasing companies are facing losses of tens of millions of pounds following the collapse of a lessee.
The lessee, Leicester-based manufacturer, Engineering Plastic Products Global (EPP), which filed for administration in November, in collaboration with a Stoke on Trent based broker, HTL Ltd, allegedly sought financings from a number of lessors for each single piece of equipment.
The scale of the losses faced by the leasing industry, with a single customer which was not itself a major corporation, raises serious questions about lessors’ ability to carry out due diligence on their clients.
It should also strengthen calls for lessors and asset financiers to participate in arrangements for the registration of title in leased assets.
The names of the lessors concerned with EPP Global, which makes moving plastic parts for the motor manufacturing and medical equipment industries, read almost like a roll call of the UK leasing industry. They include Lombard, HSBC, Bank of Scotland, Co-operative Bank, Barclays Asset Finance, CIT, Clydesdale, Allied Irish Bank, Alliance & Leicester, Siemens Financial Services, Landesbank, Bank of Ireland, Deutsche Leasing and Fortis Leasing.
HTL, which is based in Whieldon Industrial Estate in Stoke on Trent, is not part of the administration and continues to trade.
A spokesman for HTL declined to comment to Leasing Life, beyond confirming the company’s trading relationship with EPP Global. He declined to reveal his name.
It is not clear whether any criminal fraud investigation may have commenced. The lessors have given priority to civil recovery proceedings.
Until a few months ago EPP was known as Nylacast Materials. The change of name followed a £30m management buyout for a separate part of the original company, which itself is still trading as Nylacast and manufactures engineering components. That MBO operation is not involved in the administration.
PricewaterhouseCoopers partners Matthew Hammond, Colin Haig and Stuart Maddison, EPP’s administrators, declined to comment.
By all accounts hopes are high of finding a buyer for the core business of EPP Global. The international company employs 300 staff across 11 industrial premises in Leicester, together with overseas factories in China, the Philippines, Russia and Mexico.
It nevertheless seems clear that the lessors and other creditors of the existing company stand to lose most of the value of their claims.
