Lexi Holdings

'Lexi Holdings' plc was a United Kingdom based finance, property management and property development company established in 2000 that went into Administration in 2006. At it’s height it was one of the largest and fastest growing independent short-term finance companies in the UK. It entered Administration after a failure to reach terms on a new facility with it’s Bank Barclays and it’s Corporate Banking Director, Dale Sellers. Sellers has since been involved in a scandal involving the withholding of information from the regulator the Financial Services Authority in respect of miss-selling banking products [ ‘Barclays apologises to FSA after imposing swaps secrecy clause on customers’ ; Richard Tyler,The Telegraph 17 March 2012 ]1

Background

The company was formed by Shaid Luqman, a British-born ethnic-Pakistani student at the University of Manchester, who studied finance. He bought his first house during his studies, striking a deal with the university's accommodation agency. This enabled him to approach banks re financing, and by the time of his graduation in 1991 owned a portfolio of 24 flats and houses, which he rented out to fellow students.

History

In 2000 Luqman secured a loan of £2.5m from Barclays Bank to form Pearl Holdings. The company provided bridging loan-finance to high-net-worth individuals to build property portfolios, focusing mainly on projects which converted offices and hotels into flats. Providing agreed finance against a surveyor-agreed valuation of the final project, the company would lend within 24 hours. The loan would remain in place until project financing could be provided by a long-term lender.

Renamed Lexi Holdings plc in 2003, clients included MP's and footballers. The firm grew so well and quickly - in 2003 it was reported to be making profits of £21.4m on a turnover of £36m - that in 2004 Luqman was named Entrepreneur of the Year by Ernst and Young.

At its peak, the company was worth £300M and owned a Gulfstream IV business jet, while Luqman had a personal estimated wealth of £250m personal wealth, placing him 238th on the Sunday Times Rich List. In an interview in 2005, Luqman commented: "Overall, we are a billion-pound company. In 10 or 20 years, I want us to be as big as a high street bank."

If clients defaulted on loans with Barclays Bank’s assistance developments would be placed in separate holding companies. The company at the time of administration owned 47 acres of prime residential development land at Ten Acres Lane Newton Heath Manchester worth an estimated GBP 50m, the site of the former Mansfield Brewery in Nottingham worth an estimated GBP 18.5m, a retail park in Leeds worth over GBP 20m a development site near Huddersfield worth in excess of GBP 15m, two hotels in the Lake District and a prominent development site in Piccadilly Gardens, Manchester. Many of these projects were partnered by were designed by prominent English architect Stephen Hodder MBE, who won the RIBA’s Stirling Proze in 1996 and is the current President of the Royal Institute of British Architects, as were Lexi partnered projects in Saudi Arabia and a GBP 3.5bn consortia leading a retail development in Cricklewood, London.

Administration

After protracted negotiations between Lexi and Barclays and the failure to reach a settlement with it’s bankers Adminstrators were appointed on 5th October 2006. Brian Green and Richard Fleming of KPMG were appointed over Lexi and associated company Ten Acre Limited.

Green and Fleming and jointly been involved in a number of high profile pre-pack administrations including JJB Sports [KPMG administrators to arrange pre-pack sale; Accountancy Age Sept 24 2012] and Blacks Leisure [KPMG sells Blacks to JD Sports via pre-pack administration; www.kpmg.com Jan 9 2012]. In a ‘pre-pack’ as opposed to a normal sale the business is not marketed and prices have been negotiated prior to appointment. The speed and secrecy of the transaction often leads to a deal being executed about which the unsecured creditors know nothing and offers them little or no return.

At the time of the Lexi administration it’s assets were in excess of GBP 180m and had liabilities of GBP 85 with an additional asset in the form of Ten Acre Limited valued then at GBP 50m provided to Barclays.

Aftermath

As a result of the case against Luqman, Lexi was liquidated. Further cases against Luqman resulted in a second period in jail, since which he has suffered medically diagnosed psychological issues. Banned from travelling abroad and with a court order both holding his existing passport and banning him from applying for a replacement, in April 2011 he was sentenced to 10 months suspended for 18 months and ordered to wear an electronic tag for three months, after applying for a replacement passport.

In October 2010, Luqman's brother Waheed was jailed for 18 months for contempt after he attempted to conceal bank accounts, retained company documents and breached passport orders in relation to the failure of Lexi.

A claim by KPMG/Lexi against Manchester-based law firm Pannone for £50M with regards alleged breach of contract and professional negligence, was settled out of court in February 2011.