Park First Statement: 17 October 2019
Park First is surprised that the FCA has chosen to commence legal proceedings at this time when the FCA is aware of the material steps that Park First has been taking to restructure its car parking schemes for the benefit of investors. The proceedings are unmeritorious and will only disrupt the steps that Park First is presently taking.
Park First does not accept that the parking schemes that it operates were illegal collective investment schemes. Park First has always considered the schemes to be property investments whereby investors acquired a property interest in one or more spaces in a car park. The main car parks at Gatwick and Glasgow owned by Park First entities continue to be operated for the benefit of investors.
The FCA originally became interested in this matter in 2015, when Park First was approached to explain its position with regard to the legal and regulatory characterisation of the car parking schemes. Although Park First did not accept that the schemes were collective investment schemes (a form of regulated investment under the Financial Services and Markets Act 2000), in order to avoid continued disagreement with the FCA, in 2017 Park First sought to restructure the schemes. It offered investors in 2017 the opportunity either: (i) to continue their property investment under the Lifetime Lease, a structure that the FCA were satisfied was not a collective investment scheme as per their notification on their website dated 4/12/2017 in which the FCA stated “The Lifetime Leaseback scheme, which relates to the same car parks as the original scheme is not a collective investment scheme and is not regulated by us.” or (ii) to receive a refund of their investment. The large majority of investors (approximately 3800 out of 4500) chose to continue their investment, albeit around approximately 700 investors have opted to receive their money back.
Over the course of 2019, it has become clear that a second restructuring of the car parking schemes would be necessary. It is Park First’s position that the changes made to the original car parking schemes in 2017 to address the concerns raised by the FCA added additional costs to the car parking business which has been detrimental to their commercial viability.
To achieve an orderly restructuring and in light of the financial position of the Park First companies involved in the schemes, four companies in the Park First Group were placed into administration on 4 July 2019. While the administrators of those companies will need to investigate the position and consider all options, Park First has proposed in outline a restructuring proposal which will allow it to make a significant financial contribution to the businesses and to restructure the liabilities of the Park First group by contributing by way of a fresh financial contribution of approximately £33 million (gross), which is intended to be made available to investors via a restructuring process known as a “company voluntary arrangement”. These company voluntary arrangements (CVAs), if proposed to investors in due course and approved by investors, will in Park First’s view allow for the ongoing operation of the car park schemes on a commercially viable basis. These sums are presently held in solicitors’ bank accounts. This will provide funds from which payments may be made to, amongst other things, return funds to investors who opted to receive a repayment of their original investment. In addition to this, certain amendments are proposed to the Lifetime Leases. Final details of the CVAs are in the process of being developed by Park First and will also be independently assessed by the Administrators as part of their legal responsibilities in considering all options available to creditors and their respective benefits. Due to the formal insolvency of the 4 Park First companies in administration, the CVA proposals will be presented by the Administrators if they consider that they provide the best outcome for all classes of investors and creditors. Some discount will have to be made to the payments to investors who opt for repayment and this will be explained fully when the CVA proposals are issued to investors. The CVA proposals will be put to creditors who will have the opportunity to review and vote on whether to accept the proposals. Park First believes that it and its management have acted responsibly in putting forward these proposals.
In light of these matters, Park First considers the FCA’s commencement of proceedings to be unnecessary and highly disruptive to Park First’s efforts to ensure that the car parking schemes are appropriately restructured. It is noteworthy from Park First’s perspective that the FCA is only now issuing legal proceedings when it has been dealing with various matters in conjunction with Park First for over 4 years. Park First does not accept that the FCA’s allegations have any merits and it is Park First’s intention to fully defend the FCA proceedings.
Park First and its management are working to be in a position to offer this restructuring proposal for investors consideration, in the shortest possible time period, which will allow all our investors and customers to consider those proposals fully and the business objectives of providing certainty and stability following this period of restructuring. Further announcements and information will be made available in due course.
This statement is being made by the Park First group. The administrators of 4 of the companies in the Park First Group, as referred to above, may wish to make their own statement. However, we are continuing to provide assistance and information to the administrators, especially with regard to the basis upon which the contribution of approximately £33 million (gross) will be made into the proposed CVAs.
Useful links you can access
1. a very useful Q&A with regard to the administrations by using the following link https://smithandwilliamson.com/media/5242/qa-07-05-2019.pdf
2. press releases issued by the Joint Administrators and the FCA by using the following link. Joint Administrators https://smithandwilliamson.com/en/newsroom/smith-williamson-joint-administrators-of-four-park-first-companies/
3. the Companies’ website by using the following link https://www.parkfirst.com/
4. the Joint administrators website by using the following link https://smithandwilliamson.com/park-first/
You can email the Joint administrators by using the following email address ParkFirst@smithandwilliamson.com