‘Iceberg house’ investors fail in bid to sue administrators for underselling properties
Investors in two houses in St John’s Wood, north London, have failed in their bid to sue administrator Deloitte for leaving them out when the properties were sold to pay primary funder Barclays.
The claimants are the shareholders in two companies set up as investment vehicles funded by the families of investors Sanjay Hira and Jasjeev Singh Kandhari, as well as the Sakhrani family.
The properties, 38 and 40 Avenue Road, NW8, are known as “iceberg houses” because a significant proportion of their floorspace is underground. They were bought for redevelopment in 2007, put on the market in 2011 for £75m each, and sold in 2015 for a total of £62m, paying off Barclays but leaving nothing for the other investors.
Investors in two houses in St John’s Wood, north London, have failed in their bid to sue administrator Deloitte for leaving them out when the properties were sold to pay primary funder Barclays.
The claimants are the shareholders in two companies set up as investment vehicles funded by the families of investors Sanjay Hira and Jasjeev Singh Kandhari, as well as the Sakhrani family.
The properties, 38 and 40 Avenue Road, NW8, are known as “iceberg houses” because a significant proportion of their floorspace is underground. They were bought for redevelopment in 2007, put on the market in 2011 for £75m each, and sold in 2015 for a total of £62m, paying off Barclays but leaving nothing for the other investors.
According to a High Court ruling handed down today, more than 160 people viewed the properties over a two-year period in which they were being marketed by Knight Frank and Savills. Potential buyers found the guide price too high.
In 2013, Barclays demanded repayment of a £66m loan, which put further pressure on the investors to sell the mansions.
Although refinancing was attempted, administrator Deloitte sold the properties to two high-net-worth families in 2015. One property was sold for just over £21m and the other for just over £40m. This was used to pay off the principal amount that Barclays had advanced to finance the projects, its fees and some interest payments. There was nothing left for other investors.
The investors sued and, at a two-week hearing in December, their lawyers agued the administrator had exceeded its powers, not had due regard for creditors other than Barclays, failed to understand the true value of the properties, and didn’t take reasonable care to secure the best price.
However, in a ruling haded down today trail judge Mr Justice Adam Johnson dismissed their arguments.
He found that even if the administrators had acted differently, it would no have been possible for the properties to have been marketed for longer, and the result would have been the same.
Fitzroy Street Capital Inc Bmb Avenue Road Limited and Lee Antony Manning Matthew David Smith v Barclays Bank Plc
Business and Property Courts (Mr Justice Adam Johnson) 20 June 2022
