One industry insider, who did not want to be named, said, “At least the Great Train Robbers wore masks, these guys have done it in plain sight”. We take a look at what some are labelling the “Great Classic Car Robbery”. In doing so, we try to understand how an auction house went bust owing collectors, enthusiasts and many private individuals nearly £6,000,000!
How did this happen? Where are the missing millions? And who is responsible?
Auctioning classic cars should be pretty straightforward, right? The seller contacts an auction house and agrees a/the deal. The auction house promotes the car ahead of the auction. On the day of the auction, the car sells. The buyer then pays the hammer price, plus a commission, to the auction house in exchange for the car. The happy seller receives the hammer price, less the commission. The auction house keeps the fees for its services.
A typical example.
Hammer Price £10,000
Buyers Commission (5%) £500
Auction House receives £10,500
Sellers Fee Commission (5%) £500
Seller receives £9,500
Auction house income £1,000
The simple illustration above shows how the flow of cash should work. The auction house rightfully owns just a small portion of the transaction. Their role is to act as a trusted secure corridor transferring money from purchaser to seller.
From details we’ve seen, Coys were doing something wildly different; offering, in a number of instances, their own interesting take on the correct process above. Official documents we’ve indicate that on a number of occasions, Coys kept buyers’ funds that should have been passed onto sellers.
This was clearly hugely distressing for owners. Their cars had been handed over to the “buyers”, but they’d received no receipts. During our research, we discovered records at Companies House which reveal that in 2018, one angry owner obtained a High Court Order against Coys after they failed to pass on funds from a Porsche they’d sold on the her behalf.
Sadly, this wasn’t a one off. Further records obtained by us, reveal that prior to 2018, Coys were receiving “sustained pressure” from creditors. Significantly, in 2019, a number of legal claims were brought against Coys. These claims related to “vehicles sold without authority to do so” and also vehicles “being sold at a much lower price than that agreed with the owners”.
This behaviour appears too widespread to be discounted as mere one-off errors. Some have asked if this was systematic and deliberate behaviour by the Directors? At this stage it is difficult to say; either way what is clear is that the ship was sinking and the rodents were looking for a way to depart.
Panicked by the increasing pressure from creditors, courts and claimants, in early 2020 the directors contacted a top 100 law firm in central London, Russell Cooke Solicitors, seeking a way out. The exact detail of those discussions are not available, however, we did find out that Russell Cooke advised the directors to seek the urgent advice of a licensed insolvency practitioner. Code for: abandon ship, quickly.
Being unable to pay the debts they’d accumulated, the directors had little choice. Coys were broke. The directors faced the certainty of being personally liable for the debts they had run up. Shortly after taking the advice given to them by Russell Cooke Solicitors, in March 2020, the directors filed for Administration with FRP Advisory. This gave the directors protection from claims, creditors and courts, for the time being.
FRP now had control of Coys and the mess created began to emerge. The numbers are eye watering. Even more staggering is how a company who made a loss of over a quarter of million pounds in the previous financial year could go bust owing an outrageous £5,856,897 (and thirty pence) just over a year later! Hence why many in the industry are labelling this “The Great Classic Car Robbery”.
Combing through the records of debt, reveals an alarming situation. Here are just a few examples of the amounts owed to some;
£749,701 - The Brunelli family as part of a legal case spearheaded by Solicitors Dixon Ward.
£602,000 - Optima Trading in Germany.
£450,000 - JBR Capital, a classic car finance house in London.
£370,000 - Andreas Pohl, a German billionaire who claims he was duped by Coys when he purchased a Porsche from them.
£445,000 - Ashtree Trading, a classic car business in Shrewsbury.
As well as the colossal numbers above, there are numerous cases of innocent members of the public who have been the victim of Coys behaviour. These private individuals trusted Coys. Instead of repaying that trust, Coys sold their cars and kept their money.
Mr Abbott - £59k
Mr Booth - £69k
Mr Crampton - £17k
Miss Swindale - £4k
Mr Lloyd - £2k
Miss Kuassen - £21k
Mrs Taylor - £7k.
The big question; where is £6,000,000 now ?
The summary is stark. At the time FRP gained control there was a relatively small amount money in the bank account, huge sums of money was owed and the Directors had withdrawn over a quarter of a million pounds for themselves.
According to the records, at the time the Administrators gained control of the business, the ‘cash at bank’ stood at just £157,000. We can also exclusively reveal that prior to the business crashing, Director(s) withdrew £228,000 in the form of personal ‘loans’.
When a company goes in to Administration it can often be because of a so-called ‘cash flow’ issue. In effect, this means the company is owed large amounts of money which it hasn’t collected, hence it runs out of cash. When we forensically examined the Coys accounts, they had very little book debts.
Another reason for companies to enter into difficulties is because money is tied up in assets. Coys did have tangible assets, stock and such like and what accountants like to call ‘intangible assets’, often known as ‘goodwill’. That last bit will raise many an eyebrow.
The Administrators moved quickly to turn these assets into cash in order to pay those Coys owed money to. We can exclusively reveal that all assets have been sold. Our enquiries to the company charged with selling the assets failed to uncover any more information about the sums involved. They remained extremely tight lipped about the buyer and the amounts received, refusing point blank to answer our questions. It is expected to fall far short of the money owed.
That leaves the trail going cold, for now. At this stage we can only speculate where the remainder of the £6,000,000 is. A possible clue could be gained from comments by the Administrator buried deep in their report; “It should be noted that a number of the [Coys] Company [bank] accounts were in foreign currency accounts”. There could be a simple explanation for this as Coys often held auctions outside the UK. We’ll have to wait for a fuller picture to emerge.
Frustratingly at this stage, we come to a dead end. But we’re not ready to give up. This is a shocking story and the full story needs to be told.
Who is responsible? This seems easier. The Companies Act regulates companies and directors in the UK. Its primary aim is to “codify the Directors duties”. Some of those duties explicitly include, “a duty to act in good faith”; “a duty to exercise skill and care”; “a duty not to make a secret profit”.
Simply put, the Directors are responsible if a company gets into this kind of mess. In the case of Coys, there were two Directors, but interestingly only one shareholder who owns 100% of the business: Mr Christopher Routledge. We’ve been unable to source comments from him for this article. A source , who did not want to be named, exclusively revealed to us he thought “Mr R was in Canada”.
Where now? In February 2020, just before taking advice from a top 100 city law firm in March, the Directors went ahead with an auction of classic cars in London. Some have called this reckless. Knowing what we do now and on the balance of evidence we’ve seen, we think that would be an accurate description.
The upshot of that particular ill-conceived sale is that numerous individuals are now left in a state of limbo. Purchasers have paid for cars and believe they now own them. Sellers who haven’t received any cash quite reasonably believe they still own the cars. Who is right?
We found reference to this alarming situation hidden beneath a mountain of jargon deep in the Administrators Report. We discovered the following statement; “Instructing Russell Cooke to undertake a review of where title vests in respects of vehicles sold and sellers have not received their proceeds”. Simply this means; give us a legal ruling as to who owns the cars!
The Administrators, FRP, have now moved the company from Administration into Liquidation. Part of that process will be to ask searching questions of the Director and 100% owner, Christopher Routledge, in particular just where is the quarter of a million that was drawn out as ‘Directors Loans’.
At the time of publishing this article, FRP were unwilling to give us further information citing “on going enquiries”.
Give these shocking revelations, we all now have to ask ourselves; can we, as an industry, stop another catastrophe like this happening again? That has to be the big question for the industry.
We’ll continue to seek answers from all those involved in “The Great Classic Car Robbery” and we’ll bring updates as we get them.
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