Lies And Labyrinths: Former Big Beast Maud Faces Bankruptcy In Row With Tchenguiz And Libyan Wealth Fund
He once owned some of the most valuable buildings in the world, and built up a portfolio valued at more than €4B (£3.6B). But UK property investor Glenn Maud could be declared bankrupt by the end of the month following a judgement in a long-running legal battle against Libya’s sovereign wealth fund and fellow entrepreneur Robert Tchenguiz.
In April, Mr Justice Richard Snowden gave a judgement in favour of the Libyan Investment Authority in its legal proceeding to have Maud declared bankrupt over a £17M debt. This month Maud was given until 29 June to lodge a case with the Court of Appeal or face an immediate bankruptcy order.
In his judgement, Snowden described the case, which has been running for more than four years, as “labyrinthine.” It involves debts racked up to purchase Santander’s giant Madrid HQ in 2008 for almost €2B, and in his judgement, Snowden said Tchenguiz had been found to be lying when he gave evidence to the High Court and Maud had been “inconsistent and contradictory” about whether he had any assets to pay back his creditors.
The judgement also showed that after a 10-year fight to try and make some sort of return from the purchase of the building, Maud and fellow former owner Derek Quinlan received nothing.
Maud owed the Libyan Investment Authority money because in 2008 it lent one of his companies €12.5M, which was used to fund his part of the equity in the €1.9B acquisition of Santander’s 4.3M SF campus in a joint venture with Derek Quinlan. The deal was completed the day after Lehman Brothers collapsed in September 2008. Maud and Quinlan also used to own Citi’s £1B London HQ together.
The judgement said a group of banks provided €1.575B in senior debt to fund the purchase, Royal Bank of Scotland provided a €200M junior loan and a €75M personal loan, and Maud and Quinlan put up just €75M of equity, some of which Maud borrowed from the Libyan fund.
The credit crunch sent the value of the building plummeting, and the special purpose vehicle that owned it went into bankruptcy. Tchenguiz teamed up with Abu Dhabi fund Aabar in 2010 to buy RBS’ loans to the property and the personal loans to Maud and Quinlan to try and take control of the building.
When Maud did not repay the debts, both the LIA and Tchenguiz and Aabar sought to have him declared bankrupt. Maud argued that Tchenguiz and Aabar were only doing this to take control of the Santander HQ, which would be against bankruptcy laws; and that he had tried to repay the LIA but was unable to do so because sanctions against Libya made paying it back illegal.
In his judgement, Snowden said Tchenguiz had been found by a previous judge that oversaw the case to have lied giving evidence, and that later on, he had declined to be cross-examined.
“Whilst the decision not to allow Mr. Tchenguiz to be cross-examined plainly does him no credit whatever, it may, to some extent be explicable on the basis that having been publicly and no doubt painfully exposed as a liar in the Commercial Court proceedings, Mr. Tchenguiz was simply unwilling to submit himself to a similar ordeal at the hands of counsel in these proceedings,” Snowden wrote.
He also said Maud had been contradictory in evidence he gave about whether he owned shares in the company that owned the Santander HQ, which would have indicated he would be able to repay creators if it was sold. The judge said his evidence showed “a pattern of inconsistent and inaccurate statements by Mr. Maud which, even if subsequently sought to be explained when Mr. Maud was challenged on them, mean that creditors simply cannot trust or rely at face value on what Mr. Maud says about his assets and affairs.”
Snowden said although Maud had said he had no assets to repay creditors, he had enough assets to fund years of complex litigation in multiple countries.
Maud had reportedly been trying to hang on to an ownership stake in the Santander HQ so he could receive proceeds from its sale by the Spanish bankruptcy courts.
But according to the judgement when the building was finally sold in January this year after a 10-year fight, “Mr. Maud, Cruz [a company of Maud’s] and Mr. Quinlan received nothing.”
The amount it was sold for did not leave anything left over for the equity holders. Tchenguiz and his fellow investors did make a profit, however. The judgement showed they paid about €195M for the loans, but were repaid about €270M, meaning a profit of about €75M.
The building was bought by the Reuben Brothers, who then sold it on to Santander itself.
Throughout all of this, the Libyan Investment Authority wanted its €12.5M back, a figure which rose to €22M (£17M) with interest. That debt ultimately led to Maud being declared bankrupt by Snowden. He has until the end of the month to appeal.