The administrators appointed to Tayside Aviation after its collapse in April have now published a progress report detailing their work on the recovery and sale of Tayside’s assets and the dispersal of funds to the company’s creditors.
While indications are that secured creditors will get some if not all their money back, the news for unsecured creditors, which include those customers who had paid upfront for pilot training programmes, isn’t nearly so good, with the administrators only willing to state at this stage that “there may be a nominal dividend” payout.
55-year-old Dundee-based flight academy Tayside Aviation entered administration on 20 April this year, some 15 months after it had been purchased by local entrepreneur Tony Banks, founder of the Balhousie Care Group. The collapse of the business led to 22 job losses and revealed potential losses of more than £700,000 owed to students who had paid upfront for their training, including individual deposits of more than £70,000.
The administrators, Interpath Advisory, have now reported new headline figures from their work which show current debts of more than £1.4m against £0.5m in realised assets, the majority of which came from the sale of the Tayside’s training fleet. Valued initially at a little over £787,000, the administrator’s report shows that they raised £495,000 from the sale of the aircraft.
Interpath Advisory also revealed that they made the first creditor payment on behalf of Tayside Aviation in August, with £32,329 paid to the Royal Bank of Scotland to cover a bounce back loan that the academy had taken out with the bank. The administrators have also revealed details on the amounts still owed to other creditors, and indicated who is likely to get paid.
At the top of the pile of secured creditors are those who took out some form of ‘charge’ over Tayside – that is securing their loans against the assets of Tayside aviation. These charges include two charges filed in favour of Mr Banks personally and also for a company he controls, made to secure investments they had made into the pilot training academy.
Companies House documents show two floating charges were made in favour of Anthony Banks, one for him personally, filed three weeks before Tayside Aviation entered administration, and the second for his company ARB Scotland (Investments) Ltd, filed just three days before the academy collapsed.
As reported previously in FTN, due to the close proximity of the filing of the charges and the academy’s subsequent collapse, the administrators sought legal advice “on the validity of the charges” filed to give Tony Banks and his company ARB Scotland (Investments) Ltd preferential creditor status.
Having now taken that legal advice, Interpath Advisory have stated in their progress report that they “anticipate” that Tony Banks will be eligible for a dividend payment against his £110,000 floating charge.
The floating charge filed on behalf of ARB Scotland (Investments) Ltd, however, has been rejected in full. This is possibly because it was filed so close to the date of the company’s collapse. FTN understands that this floating charge was valued at over £1.2m. Mr Banks has previously asserted that he (and his businesses) had invested £1.5m in the academy following its acquisition.
There were press claims that Mr Banks and/or related companies had invested £3m into Tayside Aviation, but this figure is not evident in the administrator’s figures. Of the remaining creditors, next in line are those defined as ordinary preferential creditors, namely Tayside’s employees. The report shows that they are still owed a combined total of £34,000 in unpaid wages, adding that based on current estimates they should receive payment in full. After employees, the secondary preferential creditor is HMRC, and so far the administrators have yet to receive any claim for VAT, PAYE and national insurance contributions, although have an estimate on what it might amount to and report that a dividend should be available when HMRC makes a claim.
Where this leaves unsecured creditors remains somewhat unclear at this stage, but indications are that they will likely only be receiving pennies in the pound in reimbursement, if anything at all. While Tayside’s former students seem likely to get little to nothing from the liquidation of the academy’s assets, those that had paid deposits by credit card have reportedly had some success in securing refunds and so not all have been left completely out of pocket.
Since the collapse of Tayside aviation, the flight training industry has been doing what it can to help and while schools have been unable to afford to offer free training to complete former Tayside students’ training programmes, discounts, bursaries and other funding assistance has been offered. FTN understands that most of the ex-Tayside cadets are continuing their training at other UK Approved Training Organisations, the nearest being ACS Flight Training in Perth.
At the same time that the administration work has been progressing there has also been an ongoing legal battle, brought by Tony Banks against Tayside’s previous owners. In June, ARB Aviation, a company set up by Banks for the acquisition of Tayside from husband-and-wife James and Kathleen Watt, made formal legal claims under the warranties of the sale and purchase agreement between ARB Aviation and the Watt family. The Watt family have refuted all assertions made by ARB Aviation and have informed FTN that they will be pleased to “put the record straight” when they are legally able to.
Meantime, payment is due to Interpath Advisory for its administration work to date, which the report shows stands at just under £486,000, based on 943.5 hours at an average rate of £515.09 per hour. These costs, plus various legal costs associated with the Tayside collapse, seem quite likely to eclipse even the money lost by Tayside employees, trade creditors and, of course, the student pilots themselves.
