Bankrupt property investment “genius” Spencer Michael has failed in his High Court bid to prevent the winding-up of his seven property investment consultancy firms.
Michael, who in the past has boasted that “the Financial Times calls me a genius”, was attempting to avoid a series of public interest winding-up petitions that the secretary of state for trade and industry had issued last year following allegations about the way in which Michael ran his companies.
It was alleged that the companies had no proper documentation; failed to act with probity in running property investment courses; did not return deposits; and failed to account for rental income.
Michael, who, as a bankrupt, is no longer a director of the companies and therefore cannot resist the petitions, claimed that he had appointed Czech national Marcela Frolikova as a director prior to being made bankrupt in March and that, accordingly, she could act on behalf of the companies and resist the petitions.
Deputy High Court Judge John Jarvis QC heard submissions from counsel for the secretary of state that Frolikova had not been appointed as a director before Michael’s bankruptcy and that she was therefore not a validly appointed director. Counsel contended that, on that basis, the petitions could go ahead.
After hearing oral evidence from Frolikova, the judge said: “I have reached the clear conclusion that Ms Frolikova has no real knowledge of the property investment business and is merely being used as a stooge by Mr Michael in order for him to continue to have control over the companies.”
Rejecting Frolikova’s evidence, he found that her witness statement was “plainly not written by Ms Frolikova in her own words” and was “palpably untrue”.
He said: “I find her evidence inconsistent and unreliable and I cannot accept that she was appointed before the bankruptcy of Mr Michael. Therefore she is not a valid director of the companies.”
The judge went on to direct that the winding-up petitions should now be heard.
In the matter of Property Investors Courses Ltd and others Chancery Division (Mr John
Nicholas Caddick (instructed by the Treasury Solicitor) appeared for the claimant; the defendant appeared in person.
