West End agents Farrar Stead & Glyn suffered three years of continuing losses until the company collapsed in May. The accumulated red ink totals £825,000 and the balance sheet deficit for the trading company, FSG Ltd, is £1.1m, says liquidator Rayner Essex.
In its report to creditors, Rayner Essex says that a freehold property — 656 Fulham Road, SW6 — and the goodwill of the company had been sold to connected persons prior to the collapse.
The liquidators are making inquiries to establish that the property sale to Peter Farrar’s sister-in-law and the sale of the business and goodwill to his private company, Farrar Properties, were at market value.
A £200,000 unpaid VAT bill provoked the collapse. On May 10 Customs & Excise officials seized the company’s office equipment and furniture to settle the claim and, as a result, the company could no longer trade. FSG’s directors were advised to seek a voluntary liquidation. Other preferred creditors include the Inland Revenue, with a PAYE claim of £189,000, National Insurance contributions of £121,000 and an outstanding wages bill totalling £13,000.
FSG traded profitably until 1988 when it expanded on the back of the agency boom. A new commercial office was opened in Sackville Street, W1, and commercial staff increased from seven in 1986 to 22 in 1988. But the collapse of the commercial development market hit FSG hard. It had a major shock with the demise of Broadwell Land; the agents were left with a bad debt of £250,000 on the developer’s Theed Street project.
In October 1989 two directors of FSG — Downing and Harrison — proposed the merger of FSG’s commercial business with another firm, but the deal never took place. Sale of the Sackville Street lease was eventually secured at a reverse premium of £100,000 and in March 1990 Downing and Harrison were asked to leave the company. In early 1991 further merger talks were entered into; the business was eventually sold to Farrar Properties.
