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Troubled property fund fights to recover £50m
by Rachael Revesz on Feb 14, 2013 at 10:11
Troubled property fund Stirling Mortimer Global Property is fighting to recover more than £50 million from property developers and lawyers.
In its results for the year ending 30 June 2012, Stirling Mortimer said it was claiming €23 million (£19.4 million) from Spanish property developer Geprolar ‘for non-delivery of the funds’ units’, and €2 million from Prasur.
Geprolar has since entered administration, but the Stirling Mortimer board said it was still confident it could get the money back after a previous successful claim against the firm. ‘The board has reviewed the latest accounts of Geprolar available to it, which indicated substantial assets which the claims could be based on,’ it said.
The fund is also locked in a battle over the termination of contracts made by its Cape Verde II sub-fund. Stirling Mortimer said a memorandum of understanding struck with the developer had not been adhered to and that it was in the process of starting legal action against the developer. It added it believed it had ‘a good chance of success’ of receiving €11.8 million.
The legal battles are not Stirling Mortimer’s first foray into the courts. In November 2010 the High Court ordered law firm ELS International to pay it €9.8 million that went missing from the fund. Former ELS partner Joe Ezaz was accused of misappropriating the money and in April 2012 Stirling Mortimer reached an out-of-court settlement with ELS and Ezaz over the funds. The board said that to date it had sold some of Ezaz’s previous assets for €3.5 million and was in the process of selling others.
ELS has now fallen into administration and Stirling Mortimer said it was seeking to recover €27.4 million it said it is owed from the law firm. It said that amount represented the difference between the sums paid to ELS for right-to-purchase contracts and the sums received by property developers. The claims relate to its No 4 Cape Verde, No 6 Morocco and No 7 Cape Verde II sub-funds.
‘Although ELS is in administration, the directors are investigating all possibilities of recovering the monies owed to the fund,’ the Stirling Mortimer board said.
New Model Adviser® reported in October last year that investors in the Stirling Mortimer funds had launched legal action against ELS, alleging professional negligence in relation to their investments.
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