THE battle over the future of a £200million East Lancashire storage pod business has reached the High Court.
Lawyers representing Business Secretary Greg Clark insist Store First is a “house of cards” and should be wound up to protect investors.
But Toby Whittaker, who runs the Padiham-based firm, and related entities, insists his empire, totalling 22,5000 units, should remain intact.
A 13-day trial has opened at the Business and Property Court in Manchester, before Judge David Hodge QC, to determine whether five interlinked Store First outfits, including premises off Davyfield Road in Blackburn, can continue trading.
Paul Chaisty QC, for the Secretary of State, alleged the storage pods, bought by private investors and pension schemes, had been sold on the basis of “misleading information and testimonials”.
He told the court that between March 2011 and August 2016 the Store First group had raised in excess of £209million, from around 6,600 investors, for the pods.
Mr Chaisty said a number of investors had been left with pods which were unsellable - then faced demands for business rates and fees associated with self invested personal pensions (SIPPs).
“Many investors purchased several units, which would have taken them over the business rates exemption for small investors,” he added.
Mr Chaisty said the company would claim that pods had not been sold since 2016 and Store First outfits were financially sound now.
“We say and will seek to demonstrate that the proposition that these companies are financially sound is absurd. It is a house of cards,” he added.
Mr Chaisty alleged any positive balance sheet figures for various Store First companies had been generated by internal loans between different arms of the business.
He also told the court that any suggestion investors would “face chaos” if their winding-up orders succeeded was hard to accept, as another company Paystore, run by Mr Whittaker’s wife, managed many of the storage pods.
Nicholas Peacock QC, for Store First, said the Secretary of State had sought two major undertakings, from his clients.
One was for a compensation scheme to be established, he told the court, which would result in a payout of £34million, which was not financially viable.
The Business Secretary had also sought to have Mr Whittaker barred from being a company director, said Mr Peacock, which was also unacceptable.
Mr Peacock said 14 other undertakings had been proposed by Store First, including no further pod sales, a “profits top-up” scheme and an offer to manage any of their units in private investor hands.
An annual audited report would also be produced, detailing the company’s performance and leases for any unwanted pods could be surrendered, he said, with the ground rent waived, where applicable.
Ten investors will be called as witnesses by the Secretary of State during the trial, the court heard.
Three other investors, said Mr Peacock, and three end users of the pods, will give evidence on behalf of Store First.