Would the Sefton Group have been trading while insolvent if the multi million-pound rescue package had not been agreed?
Treasury Minister Eddie Teare was careful in his answer when he was quizzed on the issue in the House of Keys and by iomtoday.
Replying to a question from Howard Quayle (Middle), Mr Teare said that following the restructuring, involving the government support, a £2 million injection by shareholders and the write down of bad debts, the group would be left with a positive valuation.’ It would not be trading while insolvent in my opinion.’
Mr Teare was pressed on the issue by iomtoday. We asked him: ‘Is that saying without that package it would be trading insolvently or are you saying it has been trading insolvently up to this point?’
He replied: ‘No, I’m not qualified to say whether it has or hasn’t been trading whilst insolvent. What I am saying is that post this reconstruction, it’s in a much stronger position to meet its commitments as they fall due. If you look at the 2011 accounts it does state there that there are material concerns about the company’s cashflow.’
He added that are legal penalties against a company’s directors if they take further credits without disclosing the company is insolvent.
Asked how perilous he felt the Sefton Group’s position had been, Mr Teare said he felt it could have traded throughout the summer but there had been no guarantees beyond that.
In the Keys he was asked about an earlier loan on £450,000 requested by the Sefton Group in April last year. He said the loan money was paid to Treasury to clear the company’s ‘significant’ debts.
Mr Teare told MHKs the amount outstanding on this loan was £202,000.
Michael MHK Mr Cannan asked why the £450,000 had been kept secret and political members not informed. Mr Teare said being a public quoted company there was a potential for insider dealing and he wanted to protect members.