Arena Television: The collapse continues

Arena Television collapsed at the end of 2021 with debts of £280 million.

Loans from 55 lenders had been secured against thousands of items of broadcasting equipment that simply did not exist. The collapse occurred when one of the broadcaster’s creditors failed to locate ‘leased’ equipment during an asset verification inspection.

In the previous edition of DAF we looked in detail at the proceedings that have been bought against the companies’ directors. Further progress has occurred since and the administrators filed an updated report at Companies House in June 2022.

This report reveals:

• No parties were interested in the purchase of the business with a view to recommence trading and GBP 8.37 million has been made through the sale of assets at auction.
• Assets identified as those belonging to asset based lenders were either collected or sold on the lenders behalf at auction.
• Banking group CYBG had claim to three outside broadcasting trucks and 12 cameras that realised £4.5 million.
• One outside broadcast truck was unable to be sold at that time due to a claim from a third party and two cameras are being repaired prior to sale.
• The directors were made bankrupt on 22 February 2022:
  • This was obtained after the administrators had demanded the sum of £250m from the directors.
  • Rather than obtain summary judgment for that full amount, which can be hard to enforce overseas (which is important given the unknown whereabouts of the directors), the administrators sought and obtained default judgment in the sum of £100m (plus £500,000 in costs).  That amount was the amount the judge was satisfied was repayable by the directors. The amount can be increased at a further hearing if needed.
  • Following the default judgment a statutory demand was then served on the directors demanding £100.5m within 21 days.
  • When the directors did not respond the administrators petitioned for bankruptcy which was granted.
  • The administrators expect the Arena TV companies to be the majority creditor in the bankruptcy estates.
  • The administrators are aware that one of the directors has unencumbered properties in the UK and overseas and shares in a property holding company.
  • Steps have been taken to secure overseas property in Spain – as part of the default judgment it was ordered that the property be held on trust for one of the Arena TV companies.
• Of the 55 asset based lenders who claim ownership over broadcasting assets nine had assets that could be physically identified to support their finance agreements. Following the collection/agreed sale of those assets those lenders are now unsecured creditors. The lenders who did not have any recourse to assets are also unsecured creditors.
• The Serious Fraud Office (SFO) opened an investigation into the companies’ affairs:
  • The SFO announced that an ongoing criminal investigation is being conducted into the business practices of individuals associated with Arena Television Limited and its linked entities.
  • It is reported that on 23 February 2022 three sites were searched by the SFO with support from the National Crime Agency. Two individuals were arrested and questioned and the investigation is ongoing.
  • Press have reported that the SFO is believed to be in contact with the French authorities about the whereabouts of one of the two absconded directors.
• The administrators continue to identify and pursue potential claims against third parties. It has been reported in The Times that the administrators have issued a case against one of the suppliers to Arena Television as well as an employee who held a senior finance role.

We will continue to watch with interest how the investigations of the SFO and the civil proceedings progress.