Tayside Aviation administrators are investigating financial moves made by owner Tony Banks in the run-up to the firm’s collapse with debts of £2.5 million.
The historic Dundee flight school collapsed into administration on April 20, with the immediate loss of 20 jobs.
Its demise has left dozens of students, whose degrees were run through the Dundee Airport-based firm, facing uncertain futures.
Many of the students, and their families, are also thousands of pounds out of pocket.
Now, a new report published by administrators, has shown the level of debts in the business. It also shows the prospects of creditors being reimbursed.
Tayside Aviation charges being investigated by administrators
The report shows that administrators Geoff Jacobs and Blair Nimmo from Interpath Advisory are investigating charges levied by Mr Banks and a company he owns in the weeks before administration.
Companies House documents show two floating charges were made in favour of Anthony Banks on March 23 and a company he owns, ARB Scotland (Investments) Limited on April 17.
A floating charge is a security held over assets, normally made to lenders issuing funds to a business.
However, the administrators have sought legal advice “on the validity of the charges”.
They are investigating “due to the close proximity of the registration dates of the charges and the insolvency of the company”, the report said.
It adds: “We have already had various matters brought to our attention by several creditors who have requested that we investigate antecedent transactions and activities.
“We have been collating and considering all of the matters raised and will progress with the necessary actions or further investigation work as appropriate and in accordance with our statutory duties.”
A spokesperson for Mr Banks said: “We continue to cooperate with the administrators and hope that they can keep the impact on all staff and students as low as possible.
“However, it is not possible to comment on specific aspects of the situation including charges held over the company or any matters which might relate to the period before we purchased the business, while the administration process is ongoing.”
Tayside Aviation debts
The 35-page report also places the company’s total debts at about £2.5 million.
The debts include £598,942 in pre-paid consumer creditor debts, and £103,423 in unused gift vouchers. It is also due £158,930 to former employees.
The report says Mr Banks put in £1.3m after he bought the company.
Mr Banks previously said he stands to lose £3m from the collapse of the flight school.
The report adds while there was “significant” interest in the business, there were no offers to buy the whole operation when a closing date of May 10 was set.
As a result, administrators are now considering selling the assets.
The report adds: “We received a significant number of enquiries regarding the business and assets.
“No substantive offer for the business was received albeit offers, ultimately for the assets, have been received.
“Accordingly, we are currently assessing the position in order to determine the appropriate next steps, which may include offering the assets for sale on a piecemeal basis.”
Tayside Aviation students thousands of pounds out of pocket
Meanwhile, dozens of students whose degrees were run through Tayside Aviation have been left thousands of pounds out of pocket.
However, the report suggests there may be a payout for the students, who are ranked as unsecured creditors.
It adds: “Based on the information currently available, we anticipate that RBS, a secured creditor (which is owed £32,329.99), will recover its indebtedness in full.
“Dividend prospects for the other secured creditors will depend upon the level of funds available for distribution and our investigations into the validity of the charges.
“Based on current estimates, we anticipate that ordinary and secondary preferential creditors should receive a dividend.
“Based on current estimates, there may be a dividend to unsecured creditors. We have yet to determine the amount of this, but we will do so when we have completed the realisation of assets and the payment of associated costs.”
Administrators estimate they may be able to raise about £1m from the sale of the company’s assets.
‘Significant liability’ for pre-paid flights
Once administrators had been appointed last month, it was “quickly determined” Tayside Aviation would not be able to continue trading.
The report also explains the reasons behind the collapse of the historic firm.
It says Tayside Aviation had “significant liability” for pre-paid flying courses. That “affected its ability to generate income from new sales”.
The report adds there were “further challenges” onboarding senior personnel which impacted the business.
The report said: “Despite a significant investment from the shareholder/ultimate owners, this led to ongoing working capital requirements that could not be funded.”
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