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DUNCAN
BUSINESS RECOVERY
. FRENCH US
OurRef .DS/BK/Q7654/Q765/Q7656/}
YourRef
80 Nethergate, Dundee, DD1.4ER
businessrecovery(
www frenchduncan.co.uk
26 ‘September 2008
‘Dear Sirs
PROPOSED PROTECTED TRUST DEEDS OF ‘WILLIAM.JOHN. QUARM
Cj ‘ANNE QUARM
Please ‘find enclosed information regarding «each :of the above four Trust Deeds. Due to the
complexity -of this case <and:the inextricable .Jinks:between the ‘four Trust ‘Deeds ‘youare ‘being sent
information on.all‘four-and felt it:would ‘be ‘beneficial to you to give some-explanation and provide
asummarised:statement.of affairs: with ‘this letter for -ease of reference.
dn the 1970's Mr & ‘Mrs Quarm <acting ‘in Partnership as WJ & Anne Quarm acquired .a :public
‘house and some 33 acres of jand at Claddach Kirkibost on‘North Uist. This :partnership-traded the
cpub -unti! 1986 when -the -pub «and a small -area .of land was ‘sold. Thereafter, ‘the couple -built a
house .on-the remaining land ‘in which :they currently reside, .and in 1988 .and “19911 ‘two ‘further
sareas :of land were ‘sold. The partnership currently operates as a Bed & ‘Breakfast ona small
scale
In 4994, Mr .& Mrs Quarm, as partners in the firm of Wd & A-Quarm took ‘on the lease of Bayhead
aN Shop at ‘Bayhead on North Uist and that.business has been operated as .a partnership since :that
QR time.
Legal advice -has .been :sought on ‘the :position and ‘the advice ‘has been that these are two quite
‘separate and distinct partnerships each with their own:assets and liabilities.
Regrettably, Mr Quarm’s current health is such that-he has been advised by his GP ‘to retire.
However, the Bayhead shop partnership has substantial debts that were being paid from ongoing
trading, As :a result of ceasing to trade these debts can not -be serviced.and the partnership has
insufficient assets to cover ‘the liabilities. As partners, Mr & Mrs Quarm are .both jointly and
severally liable for the debts of the partnership. Therefore the Quarms and the firm of Bayhead
Shop have signed Trust Deeds
The partnership of WJ & Anne Quarm owns the house and Jand at Claddach Kirkibost, against
which are secured debts to Royal Bank of Scotland. There are no other known liabilities and this
partnership appears to be solvent. The Sus assets will fall to Mr & Mrs Quarm i in equal shares,
sHensbeerrtrerttissinrr preity
sale of the house and the land easier in terms of the conveyancing with regard to the way in
which Title has been registered.
French Duncan LLP a mae rab parnership ts rpisered 1m Scohand (SO300008; - Fm Member o! msolveney Fractivoners Assocation,
POLARIS ‘Atist of panne 1 avatabie for inspection & ine Kapistered Othe: 376 West George Sireet Glasgurr G2 ALYY
Prerrerienes Where the exresson “Panne” 0d, Uns mans 2 mmbor ol Fen Dunean LL, Al coresoondene sinned y 3 named mdi signe or and on banal! Froach Lurean LLP
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As a result of Mr Quarm's enforced retirement he will not have a future income stream and the
couple will not have any surplus from Mrs Quarm's employment income to enable a contribution
to be made, The return to creditors in the Trust Deeds will therefore be wholly from asset
realisations.
The attached summarized statement of affairs indicates how the assets and liabilities flow
between the individuals and the partnerships. A full statement of affairs and estimated scheme of
division is attached for each Trust Deed. It is currently estimated that creditors will receive 39.79
pence in the £ from Mr Quarm and 35.44 pence in the £ from Mrs Quarm. Notes are provided to
each of the four statements of affairs but I would draw the following to your attention.
4 The house and surrounding .areas of land all owned by the partnership of WJ & Anne
Quarm have been valued by Uist Property as follows:
House £192,500
Land adjacent to house £ 20,000
Croft Land (de-crofted) £ 25,000
8 Building plots £200,000
It is envisaged that ‘the House, land adjacent to the house and the croft land would be
attractive as one lot to any prospective purchaser of the house.
The building plots have -been valued at £25,000 -each, on the ‘basis of ‘having outline
planning permission and in an ideal market. Only two of the plots have planning
permission and it will be necessary forthe Trustee to apply for permission for the other six
plots ata cost of £300 each. Uist Property are confident, though clearly can not make any
guarantees, that permission would.be granted. In the absence of any such permission it is
unlikely thatthe land would have much value.
With ‘regard to the Schemes of Division and estimate ‘of costs in the Trust Deed, I am
unable to estimate with any accuracy the costs in relation to the Trust Deed of the
partnership of WJ & Anne ‘Quarm since I am unable to predict how-easily or quickly the
land-will ‘sell, especially in the current market. While there has been ‘slight interest in the
house, it is not known whether the building plots will sell individually or whether a local
developer ‘might be interested in all eight Therefore, the legal costs associated with the
sale can not be predicted.
For the purposes of ‘the information provided to creditors at this stage I have deemed it
prudent to show each plot at an average realisable value of £15,000 less the following
costs:
i) Application for planning permission on 6 plots £1,800
ii) Selling Agent's fees — 1.5% £1,800
iii) Legalfees (say) - £750 per plot £6,000
However, all plots will be advertised at £25,000 once the planning permission is received.
2 It is believed that all of the debts due to the Royal Bank of Scotland fall within the bank's
security and that this security only extends to the house and ‘the land immediately
surrounding the house. Full security documentation is awaited from the bank to verify the
position.
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The couple operate two vehicles which are owned by the firm of Bayhead Shop. One of
these is valued at:£1,000-and is thus of no interest to the Trustee. The.other was acquired
‘on finance .and ‘there .is-believed to ‘be equity of around £4,000 in the vshicle..In-view..of
Mrs Quarm’s need to get to work she will require use of one of ‘the vehicles. In view of Mr
Quarm’s health and the remote.location in which they live it is proposed that they also be
allowed to retain the other vehicle, subject to Mrs Quarm meeting the remaining-monthly
finance payments from her-employment income and the finance provider agreeing to ‘this.
-A formal valuation of the business .of Bayhead Shop has-been instructed through ‘the
Torrance ‘Partnership and is awaited. In ‘the meantime, I have .continued to ‘trade the
‘business ‘inthe short ‘term :pending that valuation and whilst.a couple of parties who ‘had
shown interest in acquiring the ‘business were approached. Regrettably, those parties do
‘not wish to pursue the matter. The couple's accountants .and the North Uist Trust have
also -been approached to ascertain jf they are aware of any possible interested parties but
to date are not aware,of:any such interest. A decision on whether to continue to trade will
-be made when I receive the valuation and my agent's advice.
Creditors will note my:estimate-of fees as follows:
‘Bayhead Shop £5,000* Primarily in dealing with short term ‘trading to
preserve the value of the business whilst a valuation
cof the .business is obtained :and -possible interested
parties are investigated
Individuals £3,500*
WJ & Anne Quarm £23,238" As above, I.am unable to :predict how easily or-how
-quickly ‘the assets will sell and I would :propose that I
‘set my fee at‘614% of gross asset realisations with a
de minimus level of £15,000. The -estimated fee in
the scheme of division is -based on 612% of the asset
vaiues in the statement of affairs. In the event that
my time costs are lower that 6’2% of asset
realisations I will, of course, restrict my fees to the
level of my firm's time costs.
* All-fees are-exclusive of VAT.
I would hope to be able to carry out the work required within these budgets but clearly ‘the
time which my firm incurs in connection with the realisation of the house and land assets
is difficult to estimate-at this stage.
Creditors will be aware that they have ‘the right at any time to have the Trustee’s
remuneration fixed and ‘his accounts audited by the Accountant in Bankruptcy. The fee for
carrying out this work is 5% ‘of the Trustees remuneration, which will ultimately reduce the
amount available for payment of a divided.
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Should you have any queries regarding the above please do not hesitate to contact either myself
or my colleague, Barry Kennedy
ee Mert enithaBsattan eon rereemny 4
GRO
Derek Simpson
Trustee
Derek Simpson is licensed as an Insolvency Practitioner by the Institue of Chartered Accountants in England & Wales