Erinaceous chairman Nigel Turnbull has admitted that the company may have overpaid for a property management firm that it bought two years ago.
The troubled property services group is suing three former directors of London-based Mount Street Holdings – for which it paid £51.7m in 2005 – on the ground that the company’s value was overstated.
The High Court writ, signed off by corporate governance expert Turnbull, alleges that
Erinaceous paid a price based upon a multiple of 10 applied to
According to the writ, the Goulds and Zahn gave warranties relating to the company’s financial accounts and liabilities in a share purchase agreement dated 23 November 2005.
However, it claims that these warranties were breached. As a result, operating profit had been overstated by £283,000 for irrecoverable loans to cover a shortfall in collection of insurance premiums; £1m for over-accrual of insurance premiums; £300,000 for service charge accounts; £97,409 for a non-existent facilities manager and fixed asset register; £50,000 for failure to comply with section 20 of the Landlord and Tenant Act 1985 consultation requirements and £30,000 for litigation over the Britannia Village developments in London’s docklands.
Erinaceous claims that the Goulds are liable for 95% of the damages and Zahn 5%.
A spokeswoman for the Goulds, who own residential developer Regis Group, said: “We are working closely with Erinaceous towards a swift and amicable resolution.”
