UNFAIRPAK MUST POINT OUT THAT ALL DEFENDANTS MENTIONED ARE INNOCENT UNLESS PROVEN OTHERWISE.
Taken from Skeleton Argument – THE SECRETARY OF STATE FOR BUSINESS INNOVATION AND SKILLS
Collapse of Choice and the consequences thereof
176. On 30 January 2006 it became clear that the £12.1m payment due to be made to Choice that day could not be honoured, and the CHAPS payment order was cancelled.
On 31 January 2006 FFG paid Choice only some £6.5m of its £12.1m liability. Choice went into administration the same day, “as a direct result of two major customers failing to pay their January accounts“, according to the joint administrators.
177. The fact that Choice had not been paid in full by FFG was known to Mr Rollason and Mr Fowler contemporaneously, and each of them was involved in discussions with Choice on 31 January.
177.1. Mr Gilodi-Johnson was told by Mr Hicks on Monday 30 January that the £12.1m payment had not been made, and went on to discuss the matter with both Mr Fowler and Mr Rollason shortly afterwards.
177.2. Mr Johns was informed of the administration of Choice by Mr Gilodi-Johnson on 1 February.113
177.3. Sir Clive Thompson learned of the collapse of Choice in a conversation with Mr Rollason on 1 February.114
177.4. Mr Munn’s evidence is that he first learned of the collapse of Choice upon reading an EHR board memorandum of 2 February from Mr Rollason, dealt with further below (the “2 February Memo”).
177.5. The evidence does not suggest that Mr Gillis knew of the collapse of Choice before receiving the 2 February Memo, which he discussed at the time with Mr Munn.116
178. Once the payment to Choice was missed and Choice collapsed, the Defendants knew or should have known that this was because of a lack of funding at the time. They should also have known that there was (at the least) a very high risk that payment terms would change in relation to any substitute supplier of vouchers and they should have been demanding a clear report as to what the effect of the collapse of Choice would mean. The directors should have monitored the position, including requiring appropriate financial modelling. Had they done so, the funding gap identified in forecasts by April 2006 would have come to light significantly earlier. An informed process leading to a decision as to whether to continue trading, and if so on the basis of what plans, could accordingly have been explored a lot sooner.