Elysium Law has been approached by an insolvency practitioner who has received enquiries regarding demands made by West 28th Street for repayment of loans from various Employee Benefits Trusts (EBTs).
Elysium Law has engaged with West 28 Street on behalf of over 650 clients. The alleged debts (the Loans) were assigned from Felicitas, a specially formed company in the Isle of Man, one of whose directors was Adrian Sacco. Mr Sacco has been disqualified from being a director in England and Wales and also in the Isle of Man. We’ve linked the Insolvency Service publication which demonstrates specifically his behaviour which gave rise to the disqualification. Felicitas attempted to serve demand letters and, in some cases, Statutory Demands for Bankruptcy. Elysium Law, acting in Our Clients’ interests, resisted those demands, which were all subsequently withdrawn.
Following a Mediation and our Letter of Response, Felicitas Solutions Limited (the Isle of Man Company) was dissolved after the debts were purportedly assigned to West 28th Street Limited.
Upon being further contacted, Elysium law sent the Letter of Response to West 28th Street for them to consider – Elysium Law has received no substantial response and nor have our clients.
Our Position in relation to the Demands of West 28th Street
There is a claim in breach of trust for equitable and other relief. The Defendant purports to have purchased and/or been assigned the Trust Assets and has sought to enforce a loan as between the beneficiary who is a contractor (“Beneficiary”) and the original Trust Company (“the Loans”), this was a marketed tax avoidance scheme.
The significance of the purported assignment to Felicitas, and the current purported assignment to West 28th Street, is that they were made for an improper purpose against the interests of the Beneficiaries and with a view to enabling fees to be recovered for the transfers in favour of the Trustees and secondly, recoveries under the Loans in favour of the purported assignees. Accordingly, the assignments were detrimental to the best interests of the Beneficiaries.
They were also contrary to the terms of certain oral collateral undertakings provided by or on behalf of the employers, to the effect that the Loans would not have to be repaid and were the means by which the tax avoidance scheme could operate.
On behalf of its clients, who are Beneficiaries under the various Trusts, Elysium Law contend that any assignments or transfers were for an improper purpose and are void in equity. Any beneficial interest has remained as the property of the Beneficiaries and has not been transferred or assigned. Any purported transfer or assignment is void or otherwise liable to be set aside.
The repeated assignments were in breach of an implied term of the trust relating to the proper exercise of its powers and were unlawful because they were carried out for an improper purpose (also known as a fraud on the power).
The Constructive Trust
The position as set out in FS Capital is that no interest, or right to the Trust Assets have been transferred by the various assignments because they are void. To the extent required, the Beneficiaries will contend that any trust assets alleged to have been assigned by the various assignments are held by the Defendants by means of a Constructive Trust for the benefit of the Beneficiaries. The imposition of the constructive trust arises by operation of law and imposes upon any purported assignee or transferee, the fiduciary principles of a Trustee with regard to the preservation of Trust Assets and the protection of the interests of the Beneficiaries.
The Position
In short, we think the position is as follows:
- The assignments were void;
- The loans are not enforceable;
- Those beneficiaries who have already come to an arrangement must be paid their money back; and
- West 28th Street hold all of the assets on trust for Our Clients and all Beneficiaries under the Trust.
Elysium Law are currently acting for a group of 650 Clients who are contesting this claim.
If you wish to join the claim, or are an insolvency practitioner who have been approached by West 28th Street or a firm called Fiscus Management in relation to Your Clients, then please Contact Us.