Is BGC Partners being entirely honest about its Mint deal?

September 11th, 2010

Trading floor

David Mills, the founder of Core Enterprise Management and Quayside Corporate Services, is a past master of prepackaged administrations and corporate phoenixings.

It therefore came as no surprise when I learnt today that a company where Mills was chairman, London-based interdealer broker Mint Partners, went into administration on August 16. Nor that within a few of hours most of Mint’s operations, which turned over £32.5m in 2008 but were lossmaking, had been snapped up by a larger rival, New York-based BGC Partners (whose most prominent London-based figure is David Buik).

The deal, which was for an undisclosed price, bears  all the hallmarks of being a pre-packaged administration (or prepack).

BGC appears to have been planning to acquire Mint Partners — which had “going concern” health warnings slapped on it by successive auditors Deloitte and BDO in 2007 and 2008 — for some time before the administration occurred. On August 3 Bloomberg reported that Mint Equities and BGC Partners were in talks about a “strategic alliance”. By Sunday, August 15, the Independent on Sunday was reporting that BGC was “in talks” to buy Mint. Knowing IoS deadlines, the latter piece must have been written and filed on Friday August 13.

The administrator on the deal, David Chubb, a partner in “Big Four” accountants PricewaterhouseCoopers, has history where dodgy prepacks are concerned. He oversaw a prepack that permitted US brewer Molson Coors to acquire Cobra lager whilst reneging on some £70m owed to creditors. This is what The Guardian had to say about that deal:

Among the most controversial pre-packs was that by Lord Bilimoria’s Cobra Beer business. It collapsed last year and the peer, together with new partner Molson Coors, immediately bought the business out of administration. Creditors were left facing losses of more than £70m.

Chubb was also the administrator on the quasi-prepack of aviation business Corporate Jet Services, which went bust owing the Bank of Scotland some £113m in September 2007, and where David Mills was a director both before and after the phoenixing.

After CJS went belly up, Chubb sold it back to the very management team who had led it to destruction — including Mills (who is not the ex-husband of Labour politician Tessa Jowell), ex-PwC accountant Tony Shakesby and EADS (UK) chief executive Robin Southwell.

The CJS deal formed part of the infamous Bank of Scotland Reading scandal, which allegedly involved corruption, large-scale fraud and money laundering and which cost the failed Edinburgh bank an estimated £1 billion, and in which some 50 previously innocent businesses were destroyed.

The scandal — the most egregious I’ve encountered in 20 years of financial journalism — is currently being investigated by CJS forensic liquidator Elliot Green of Oury Clark, an enforcement team of the FSA, and other UK authorities. I have no idea whether Mills’s recent decision to resign from 10 other companies is related to these probes.

Another example of a prepack involving Mills, which occurred in January 2010, has so far gained little coverage. This one, handled not by PwC but by the now bankrupt accountancy firm Vantis, saw the stationery company Concord Office Products avoid paying some £4m owed to creditors including Her Majesty’s Revenue and Customs.

The business, which makes products such as lever arch files and ringbinders, was phoenixed into a new company called Concord Filing Products, where Mills’s associates Southwell and Roger Hawes, a partner in law firm Burges Salmon are directors.

A few days earlier, Concord Office Products paid off key suppliers including St Regis, Hoffman Thornwood, James Cropper and Smurfit Kappa EskaBoard (or at least assured them that outstanding bills would be paid off by the new phoenix company).

Other companies operating in the same sector, including Wales-based Setten IXL, claim to have seriously struggled, lost business and had to lay of hundreds of workers as a result of Concord’s ability to undercut them through serial phoenixing (the office products businesses Shawcross & Dickinson and The Gordon Press were first ‘phoenixed’ into Concord Office Products by Mills, in deals advised on by Burges Salmon partner Hawes, in January 2008).

In a similar vein to BGC Partners — whose press release makes no mention of the fact it bought Mint out of administration — Concord Filing Products is in denial about having prospered at the expense of creditors via a prepack. A news release on Concord’s website claims the firm simply went through a “capital restructuring”.


On October 1st, 2010 David Mills was arrested and bailed on suspicion of “corruption, large-scale fraud and money laundering in connection with HBOS”. Several of his associates have also arrested on suspicion of similar behaviour. The arrests came under the auspices of Operation Hornet, an investigation by Thames Valley Police and the Serious Organised Crime Agency. While there is extensive documentary evidence to suggest Corporate Jet Services was used as money-laundering vehicle in 2003-07, Thames Valley Police have not included the company in their Operation Hornet probe.

  • For an article from the Wall Street Journal summarizing what’s wrong with prepacks click here
  • For an earlier piece I wrote on what’s wrong with the UK’s insolvency system, and its practitioners, click here

Short URL: https://www.ianfraser.org/?p=1801

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5 Comments for “Is BGC Partners being entirely honest about its Mint deal?”

  1. Thanks Nikki. I am quite sure that PricewaterhouseCoopers partner and serial pre-packager of businesses, Mr David Chubb, is fully acquainted with the letter of the law surrounding prepacks and administrative receiverships. It’s whether he’s obeying its spirit that concerns me. Clearly this whole area — which was loosened up by the Enterprise Act 2002 — is in urgent need of reform.

    BTW this is how Katherine Howbrook, of PWC’s media relations department, responded to an earlier request for information about the CJS administration (her email was dated 25 June 2010)

    Question from Ian Fraser: Was the administrative receivership of Corporate Jet Services designed in order to suit BoS, benefit a failed management team, and deny unsecured creditors any chance of retrieving their cash?

    Response from Katherine Howbrook: “The principal duty of an administrative receiver (set out in statute and supported by case law) is to realise the charged assets for the benefit of the secured creditor. The administrative receiver has limited additional secondary obligations to other creditors and stakeholders. The receivership strategy in this case was designed to meet these statutory and other obligations.”

    Just also remembered the Bruce Cartwright, insolvency partner with PwC in Scotland, handled the notorious prepack of Aviemore Highland Resort.

  2. My company is on the creditors’ list and I have recently be contacted by PWC – it is certainly very clear to me that Mint engaged our services with absolutely no intention of ever paying. The directors are to me in clear breach of directors duties (Bullman & Barnett) and I shall complete the admistrator’s report suggesting that — but to what good? It is a disgrace as you suggest that the BGC / Mint deal was presented as it was, as opposed to being represented for the truth of what it was — a blatant dumping of all liabilities — small and medium-sized businesses that they engaged with are owed money and the scum that they are should be exposed –their office fitters are owed £400K.

  3. Thanks for your comment Gavin. Unfortunately there’s a breed of business people here in the UK who are content to serially abuse the UK’s flawed insolvency system in order to ‘shaft’ their creditors and presumably also enrich themselves.

    What I find disappointing is that firms such as PwC are happy to lend their names to this sort of activity; and that the press rarely bothers to investigate such deals (in the case of BGC Partners / Mint Partners, 99% of media reports simply rehashed the BGC press release and didn’t even bother to mention that Mint Partners was in administration and had had “going concern” warnings on its accounts for 2007 and 2008). In the old days I suspect the firm might have been prevented from trading by the DTI and its directors might have been struck off!

    Another thing that nauseates me is that TV news bulletins give airtime to people such as BGC Partners’ David Buik — who’s main line appears to be that the status quo ante in banking and finance was absolutely fine, and that we certainly don’t need more regulation – when their firms are engaged in this sort of activity.

    No wonder Vince Cable wants to shine “a harsh light into the murky world of corporate behaviour.” This is now more necessary than ever.

  4. […] sure that Burges Salmon — whose partner Roger Hawes is a director of David Mills’s “serially-phoenixed” office products group, Concord Filing Products — […]

  5. […] administrative receivership of Corporate Jet Services and the prepack of “interdealer broker” Mint Partners (acquired by New York-based BGC Partners) in August 2010. Both were handled by PwC’s […]

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