Shoreham Closed

[Crashed&Burned]

Recent reports in the press suggest that Erinaceous, the company which operates Shoreham airport, are in difficulties. Wonder what the outcome will be....:confused:

[IO540]

Much depends on what the lease says about insolvency of the tenant. I believe the local authority still owns the freehold of the site, and they want to keep it as an airport.

Normally, anybody purchasing the assets from insolvency would be bound by the restrictions on the original lease.

Shoreham closing would be a disaster for the private piots based there because there would be nowhere else to go. Lydd is great but is a 2hrs' drive, Goodwood is no good (too tight), and that's about it south of London. The aerobatic owners could disperse to farm strips around Sussex OK. Closure would mean the end of training within a huge area; the schools have nowhere else to go.

However, Erinaceous is a long way from actually going bust.

[niknak]

IO540

In reallity Erinacious are in very deep and very serious financial do do and I wouldn't be suprised if their creditors pulled the rug this week, in the grand scheme of things, they owe £millions and have few assets.

Because of the somewhat "relaxed" approach of the two main directors to previous dealings, it is to be hoped that they didn't buy the freehold at Shoreham.
If they did, the airport is doomed to being sold to the highest bidder, and that's the end of aviation and the start of a housing development on the site.

Given the company's directors record, one has to ask if the previous owners did carry out the proper due dilligance to ensure that the airport would never become a housing estate.

Even if they still own the leasehold, there will be a strong argument for selling the site for the best price , to give all the money, which the ratepayers have paid in the past to prop up a loss making facility, to a more worthwhile benefit to the community.

[smarthawke]

Don't forget they have a bit of involvement with Fairoaks too....

[JBGA]

The existing leasehold was granted on the basis that the site would remain an airport for the next 35 years. I heard it on good authority that there is no intention to change that basis in future lease agreements.

[IO540]

Another thing is that the aviation businesses based there have leases which give them the right to carry on being there. IMHO the airport can't just be closed on a whim.

But 10-20 years down the road, anything could happen. A major factor in planning is the "fait accompli" principle ;) You are restricted by a planning restriction from developing for property. So.... you run the place down, make it an unviable business, and eventually the planning restriction will be removed because nobody wants an eyesore. OTOH everybody knows about this old trick...

GA (excluding the farm strip scene) will die out in the UK within 20 years through the lack of airfields, IMHO, unless there is a change in planning policy to enable the development of a small new airfield in the open countryside.

[Crashed&Burned]

As far as can be seen, Erinaceous' main interest is money. The recent ruling that even go rounds are charged as touch and goes suggests that aviation and even flight safety are not uppermost in their mind.:confused:

[mm_flynn]

While I know nothing about the company involved, a low approach and go around (as a planned maneuver) takes pretty much the same airport resource as a T&G so I don't think it is any more unreasonable to charge this than a T&G. IIRC there was a rant thread on this and the conclusion was that an ATC initiated Go around or a non-training one (i.e. a real safety issue) were not being charged.

[Crashed&Burned]

That's not the way I understand it. If you are right, no probs.

[Blink182]

Currently the airfield is closed for all movements.......... the company which operates it has gone into administration.

http://www.erinaceousir.com/erinaceous/news_events/rns/rnsitem?id=1208170521nRNSN2676S

[Fg Off Max Stout]

Just heard the news but saw it coming some time ago. As someone who regularly uses Shoreham this is very bad news, and is largely a result of mismanagement by the dodgy outfit that has been running the airport. I sincerely hope it doesn't turn into another retail park or housing estate but that seems to be what everyone other than local pilots wants.

With movements ceased you can bet that many of the companies based there will go under and then the spiral dive towards 'brownfield eco-village' is fully developed.

Perhaps Erinacious should be renamed Avaricious. W@nkers.

[grat]

Those clowns also 'own' Fairoaks where I am learning to fly. One last exam to do and near to my solo nav - this news is making me anxious. Hope this has a good outcome for GA and not the local housing association.

[Captain Smithy]

Very bad news. I sincerely hope that Shoreham will be saved and remain an airfield.

[603DX]

Shattering news, but maybe the behind-the-scenes activity that I believe is in progress will succeed in maintaining flying at this historic airport.

I have a modest vested interest, a flying lesson booked for later this month!

[callum91]

This is very sad news :{

I am currently nearing the end of my PPL training at Shoreham airport with a really nice flying club and it would be really upsetting for it to all to come to an end. Shoreham Airport is such a unique place and I'm sure many people would be dismayed if it were to close.

[S-Works]

Nothing like the usual panic mongering. The administrators have been called into the company that operates it. It is a bit early for all the crying and wailing. Give the administrators a few days to get there feet under the table and work out what needs to be done.

[2604]

I heard the Airport Manager has applied for a licence at the CAA for the airfield to operate under a shell company (which was agreed with the administrators). He's hoping to get things in the air again within hours.

[Sandown235]

Shoreham has a great atmosphere not just for pilots but for all the other visitors who enjoy watching the aircraft. I really hope that something can be done to save it from turning into a housing estate - it is the oldest licensed airfield after all.

Our PA-28 is sitting on the ground today at Shoreham not able to get out! Not sure what happens next!

[effortless]

What are the rules re departing in these circumstances? Presumably one can just go while using due caution.

[Monkeeeey]

Not suggesting that this might be the future for EGKA, however what is interesting is the number for 'ex airfields' the government approved for their spun 'Eco Towns'. Looking at that short list the otherday most are or have been airfields, in the southeast Dunsfold and Ford both targeted, Tangmere has already been well built around. GA seems to be very unlucky of late.

[niknak]

Efortless,

I'd try and have a word with the administrator/liquidator, despite the general conception of them being ogres they have nothing to gain by inhibiting potential trade.

If you owe any money at all to the airport company, (and that includes, for example, if you rent hangerage from a company which owes the airport company money) you'll be obliged to cough up before you can go ove your remove your "chattels".

On the good side, the liquidator will treat Shoreham Airport as a separate, viable company and look for a buyer ahead of the holding company's less viable assets.
That means, for good or bad, Shoreham will be sold off as a priority.

[will5023]

I very much doubt that this historic airfield will go into housing, funnily enough the company that gone to wall had some helicopters on site that flew away just before the airfield closed, according to sources...funny that!! How to make a fortune in aviation.....start with a big one!!
Good crowd at SHM, hope you guys can get airborne in the next few days.

W

[chaka534]

Does anyone know if Fairoaks is being closed as they are owned by the same company?

[Mike Cross]

http://news.bbc.co.uk/1/hi/england/sussex/7346625.stm

[SwanFIS]

Fairoaks is open at the moment, they are waiting to see if they are going to be affected by all this.

[effortless]

niknak

Thanks but it wasn't for me. I was wondering whether an uninvolved aircraft could simply depart. There is of course no charge for taking off and one would assume that nothing was owed.

[global12345]

Shoreham is a great little airfield, I heard a rumour that there has been some "funny handshake" types involved, let's hope it gets a fresh start under a new management team.

['Chuffer' Dandridge]

Maybe somebody sensible will buy the airport. Run it for GA types, maybe turn it into an airpark...That way, the local council will benefit by collecting council tax as well.... Run it along the lines of a French municipal airport maybe?????

Start by reducing the landing fees, sacking the ATC staff and getting an A/G operator. Then get rid of the parking meters. Then get rid of al the non-aviation businesses and lease their hangers to aircraft owners at a sensible rate. Rename it Shoreham (Mike Chapman) Aerodrome. Have an annual air display but with vintage aeroplanes only.

We can but dream........................:( It's all been downhill since they put in a hard runway

[Riverboat]

Effortless: I am not an expert in this field, but it seems to me that if the company has gone into administration, it doesn't mean that the company no longer exists. It means that the company is not being run by its previous managers, but is being run by the administrator instead. He can determine whether the aerodrome is open or not, as he is (effectively) the licence holder.

So if he has determined that Shoreham is closed, then closed it is. Mind you, there is a regulation that states that an aerodrome cannot be closed unless essential services are not available, but that only applies to Public Use licensed aerodromes. Those with Ordinary licences can close down whenever they feel like it. There are not many "essential services" required for a small private aircraft.

If the aerodrome operating company had gone belly up, and the aerordrome was floudering around without any owner or lessee (but presumably the local authority still retains actual ownership?), then I guess the aerodrome would be the equivalent of a grass field, and you could take off without having to get anyone's permission.

If I wanted to get my aircraft out of Shoreham, I think I'd just go, and argue afterwards. I can't see that I would have broken any law unless someone in authority had expressly told me I could not take off.

['Chuffer' Dandridge]

Riverboat,

I'm certain that unless you were receiving a 'direction' from an ATC provider, you could leave and argue about it afterwards. It's your aeroplane, and as it's already at the airport anyway, you already have the landowners permission to be there..Just make sure you 'book out' to satisfy the legal requirements..

Unless you owe the receiver money, then I reckon you're free to go.

[neilcharlton]

i wouldnt worry about shoreham , i imagine it will be opperated as a (profitable?) going concern .

fingers crossed it wont be developed into houses but this credit crunch should sort that one out :-)

[Justiciar]

I don't know Shoreham but a number of general principles apply here.

First, the job of an administrator is to try and salvage the company but also to obtain maximum value for creditors. This will usually involve disposing of the valuable assets as going concerns.

The BBC report says there are 30 businesses at the airport. Many of those will have leases, which give the tenants a number of projections. One of the most important is that the landlord (usually the freeholder) cannot "derrogate from the grant" of the lease. This means that if you as a landlord grant a lease for say a flying school or aircraft maintenance facility, there is a clear implication that the business will need the use of an operating airfield! Fairly obvious really. However, the landlord cannot then turn around and remove that facility.That is a breach of an implied term in the lease. I suspect that a similar argument may have been used at Lee on Solent.

So, whoever buys the airport will take it subject to the leases held by the businesses and the right to use the airfield. Most of those leases will also offer the tenants substantial protection from eviction and entitle them to a new lease at the end of their existing terms.

As for anyone with an aircraft there, I cannot see there would be anything unlawful about removing their aircraft by flying them out. They could not of course bring them back without consent from the administrator. This is so even if they do owe money, unless the airport has already exercised a lien over the aircraft.

[Mike Cross]

I suspect that a similar argument may have been used at Lee on Solent.

Not so Cluseau

At Lee the owners of the land the hangars or on is not the owner of the runway. Also the leases granted on the hangars are very short term.


WRT "unauthorised" departures the bit you're groping for is Rule 40 of the Rules of The Air Regulations
Movement of aircraft on aerodromes
40. An aircraft shall not taxi on the apron or the manoeuvring area of an aerodrome without the permission of either—
(a) the person in charge of the aerodrome; or
(b) the air traffic control unit or aerodrome flight information service unit notified as being on watch at the aerodrome.

Not NOTAMmed (yet) as closed today.

[IO540]

Notamed closed till 1100Z today.

[A and C]

If the CAA has suspended the Aerodrome licence then Shoreham is no longer a Licenced Aerodrome and so is not subject to the rules governing such aerodromes, in fact it is a field and as such removing your aircraft is subject to the normal laws governing removal of personal property from another persons land.

I would not be waiting for someone to put a chain around my prop and the months of court action that would follow to recover my property if this happend.

If it looked as if this shut down was going to take a long time to sort out I would fly my aircraft out as soon as no one was looking, I dont think that the administrators would have any wish to persue me for this unless money owing.

Fortunatly I dont see the closure of Shoreham lasting very long.

[Trinity 09L]

:uhoh: Another angle to this - are not Brighton Council and the neighbouring council the ultimate "owners" of the land as they leased it at 150yrs to this company.

[IO540]

Yes they are.

This whole business has many facets, not touched on in pilot forums.

[Flingingwings]

Another angle to the take offs.

Whilst Shoreham may not be a licensed airfield at present. Technically to take off from a 'field' as some are describing Shoreham you must have the land owners permission.

So I suppose that until the new owners (banks or Local Authority) get the required bits of paper, nothing moves :{

That is of course not considering that given the alleged 'dodgy' practices of Erinaceous - that the Administrators haven't got a Court order stopping aircraft from leaving until they've determined what is privately owned and what is owned by the Erinaceous offspring Longmint. Because if I was an Erinaceous shareholder I'd be hounding the Longmint crowd for every penny that they owe, and aircraft and that large Sussex home would be two good places to start :E

[niknak]

Bear in mind that the aerodrome is notamned closed (until 1100 as I understand it) and as such it's like any other airfield which is closed, i.e. unless you have written permission from the owner, you can't land or take off from there.
I don't know the facts, but I would also check your individual insurance policy for the aircraft regarding operating from a closed airfield, before wizzing off into the sunset.

[PompeyPaul]

But I'd be tempted to just get your plane out asap. When big business and the little guy collide it's always the little guy that looses.

[TractorBoy]

Looks like its now closed until 1300Z. Hope this all gets sorted out soon.

[englishal]

i.e. unless you have written permission from the owner, you can't land or take off from there
That is not quite true. I regularly (in the summer anyway) fly from a closed airfield, out of hours. We have a verbal agreement that residents can come and go up until sunset or after sunrise despite the AD being closed.

Insurance is not an issue.

[effortless]

It turns out that the ac I was concerned with is away in any event. I have been in a similar situation with a boat which was moored at a bankrupt repairer. The administrators tried to hold on to all the craft whether they had been worked on or not. It took a court order to get it back. If I had simply sailed it away they could have done nothing about it. I feel that the same applied to ac.

[paulthornton]

Another NOTAM in place now, closed 13:00 - 15:00.

Lets see what happens in a couple of hours. Fingers crossed.

[jamestkirk]

Don't quote me but I am sure that there is an condition with Adur council that the site must be an aerodrome for a number (not sure but quite a while) of years.

Who said that Shoreham should downgrade to A/G. Complete nonsense. It's one of the UK's busiest airfields and last checked in the top three of training/club airfields. I had people questioning me on this fact before. So before you do, check the CAA website for aerodrome movements.

Turning EGKA into an A/G airfield would bring, mayhem, madness and accidents.

[tigerbatics]

Shoreham opened at 14.30. Totally disagree with jamestkirk about A/G. An upgrade to this staus would make Shoreham a better, safer and more efficient place to fly.

[2close]

Who is responsible for this debacle?

I heard certain individuals have, in a nutshell, screwed this up big time, costing a lot of people a lot of money and heartache whilst at the same time nicely lining their own pockets.

Is there any truth in this?

[vancouv]

Totally disagree with jamestkirk about A/G. An upgrade to this staus would make Shoreham a better, safer and more efficient place to fly.

Tigerbatics - not sure what you mean by that - Shoreham currently has full ATC so becoming A/G would be a downgrade not an upgrade. ATC there have always been excellent.

[Fright Level]

Erinaceous have featured in business write ups over the last year or more. I could only find this one in the Sunday Times (http://business.timesonline.co.uk/tol/business/industry_sectors/construction_and_property/article2547259.ece), but there were others detailing the incestuous links and financial derring do within the company. I was always suspicious that as a property firm, their purchase of Fairoaks was speculation that it could be turned into another Surrey village.

[jamestkirk]

Read again. You got it the wrong way round.

[IO540]

Without ATC (and Shoreham ATC is one of the best and most helpful around) the place would be mayhem. It would be like Stapleford or Wellesbourne on a sunny Sunday but several times worse.

[tigerbatics]

No radio would be even better and with a large flat grass area what is the point of a runway? A simple and well thought out procedure exists for such cases. So the cross wind landing could be abolished as well.

[IO540]

with a large flat grass area

Where would that be? Not at Shoreham, for sure.

[PompeyPaul]

It's still strange they closed Shoreham but left Fairoaks open. Given that Fairoaks is perfect surrey village high ££££££££££ real estate material. Maybe they are keeping it going as it's got the most value ?

Hopefully there's far to many nimbys around chobham \ ottershaw way.

[goose boy]

Just heard from a friend that Shoream as closed and he heard it on the news ????

Whats happening ??

G.B

['Chuffer' Dandridge]

Vancouv,

I totally agree with Tigerbatics. A/G would in many pilot's eyes be an upgrade. Pilots would have to make their own decisions and not have to rely on ATC to do it for them. In my view, it would become safer, more efficient and would certainly attract me back there. Having full ATC does not make things any safer.......

ATC are there only to facilitate the pilot's needs and not the other way round. Shoreham ATC conveniently forgot this many years ago

[DaveW]

Probably worth your while taking a peek in the PPRuNe Private Flying forum. Lots of info there.

[vancouv]

Chuffer - I learnt to fly at Shoreham, and have done all my flying from there, and I have to disagree with you. ATC have always been excellent, and very accommodating.

I can see that full ATC is not required at all airfields, but Shoreham has a greater mix of different types and I don't think making it A/G would improve safety, quite the reverse. Plenty of pilots are capable of flying safely, but in my experience plenty are morons who don't - ATC does help to protect you against them in a busy environment.

[Foxy Loxy]

Hopefully there's far to many nimbys around chobham \ ottershaw way.

I can personally attest to the truth of that speculation as I am from Ottershaw. What I cannot speculate on is the possible benefit of selling fairoaks for housing development.

The NIMBYs have/do/will moan about aircraft noise (oh, the number of noise complaints I took when I was there in my first job), but it has to be preferable to the congestion that would inevitably result on the A319 and A320. It's bad enough as it is.

I was somewhat uneasy when I heard about Erinaceous's involvement at Fairaoks (from here - there was virtually no coverage in the Surrey Herald about it), but my feeling is that the local residents would regard an active airfield as the lesser of two evils in this case.

As to the wranglings/involvement of Longmint, I really couldn't say.

Foxy

[Al Smith]

Does this mean Fast has gone into administration as well?

[Cricket23]

Slight correction to your post IO540 re airfields south of London. Don't forget that Redhill is still around (at the moment). However, most of the time you need a floatplane to use the place, and RAVL want to cover it in concrete.

Regards,

C23

[rwhites]

large flat grass area what is the point of a runway?

I'm sure i saw a c172 use 05 at shoreham the otherday?

[Jetscream 32]

i spoke with kpmg yesterday afternoon to see if there was a deal to be done for the aviation portfolio - but the only asset eracinous had that was loss making was Shoreham - all of the other operating companies were either Longmint and nothing to do with the administration or as in the case of Fairoaks profitable and quickly placed into another assett vehicle of the group - therefore not requiring administration.

id be surprised if anyone can make money with shoreham..... not enough landing fees to cover the infrastructure costs.... thats why the council got out of it in the first place.... tennants have a right, with little opportunity to increase pricing, not many commercial options..... shame as a fabulous airfield

:sad:

[Mike Cross]

When I was learning at Shoreham it was all grass. I've even seen a jet operated off it. (OK it was the Miles Student with Neville Duke at the controls. It was on 07 and was very low as it crossed the river!)

[dublinpilot]

but the only asset eracinous had that was loss making was Shoreham

That doesn't really make sense. Are you saying that Eracinous would have been profitable except for the losses that Shoreham made?

[Hugh Mann-Facteur]

Heard earlier this evening that the airfield's been sold. John Haffenden's reportedly said it's business as usual. Anyone know more?

[wsmempson]

John Haffenden???

Do you mean this chap?

www.shef.ac.uk/english/staff/profiles/johnhaffenden.html

[Hugh Mann-Facteur]

Yes that'll be the one! ;) Er no. Sorry: for those who don't know, JH (the other one) is the airport manager.

[PPRuNe Radar]

Actually this one :)

http://www.aoa.org.uk/images/misc/aut02_5.jpg

Shoreham Airport News Jun 2001 (http://www.sanews.info/PDF%20files/2001/June01.pdf)

John was also one of the 'board' of the Airport Operators Association in the recent past.

[corkster]

i have heard that a management buyout has happend, any news for sure?

[Jetscream 32]

dublin pilot - lots and lots of different companies all owned by a parent company, however each company a ltd company in its own right - so the loss making ones go into administration the profitable ones are held within the group for re-structure and sell off by the administrator for best value to creditors.... the administrators job is to quickly identify what is viable as a going concern and what is not - clearly shoreham was not as there are no assets, no freehold, no mortgageable equipment - and a whole bunch of debt that can only be serviced by the airfield being open......

If it is a management buyout they will need balls of steel - and a lot of help... it sounds like a lovely great idea - buying airfields - but i can assure from expereince it is not - let the cost cutting begin.......... :ooh:

[IO540]

This comment is not in any way intended to apply to the Shoreham situation...

lots and lots of different companies all owned by a parent company, however each company a ltd company in its own right - so the loss making ones go into administration the profitable ones are held within the group for re-structure and sell off by the administrator for best value to creditors....

that is however a very dirty practice which will make your name stink for years to come, which is why most normal quoted companies avoid sinking one subsidiary without paying off its debts.

One does that only if there is no other option, and you don't care what anybody thinks, and you are not interested in raising finance ever again.

On even more general terms, the 'limited company' vehicle does allow one to walk away from one business while starting (or continuing) to run another doing much the same thing. This cannot be made illegal without busting the Ltd Co principle which has been a cornerstone of human enterprise for centuries. However, in recent years, it has become a lot easier to make Directors personally liable for debts which their company incurred in its final months. It's also a lot easier than it used to be to disqualify Directors... then you just need an extended family so each time you do a runner you get another cousin or whatever to run the new one.

[west lakes]

does this help??

http://news.bbc.co.uk/1/hi/england/sussex/7348883.stm

[Blink182]

So , it doesn't look like we are about to see a welcome reduction in the airport charges ..........if its the same people just under another name ?

[dublinpilot]

dublin pilot - lots and lots of different companies all owned by a parent company, however each company a ltd company in its own right - so the loss making ones go into administration the profitable ones are held within the group for re-structure and sell off by the administrator for best value to creditors.... the administrators job is to quickly identify what is viable as a going concern and what is not - clearly shoreham was not as there are no assets, no freehold, no mortgageable equipment

No problem with that. But it doesn't square up with

but the only asset eracinous had that was loss making was Shoreham

If all elements of the group where in seperate companies, and only one of them was loss making, then you close that subsidary only. (As IO540 says, you usually pay off all the debts to save your name). The group would still be profitable and there would be no need to suspend the shares of the holding company.

You certainly don't call in an administrator. If the group is profitable, you handle the matter with your own finance dept, which the help of consultants if needed, and sell the thing as a going concern, or close it down. The idea of a group with lots of subsidaries, all profitable bar one, calling in outside administrators is unheard of. It causes lots of publicity, and casts a shadow over all your other companies business, and gives your suppliers a scare. Credit terms for your profitable subsidaries suppliers goes out the window, and your debtors don't want to pay (thinking the place will be gone in a few months anyway).

The idea of a quoted PLC making such a basic mistake in unprecedented as far as I'm aware.

There has to be a lot more problems for the group, than simply one loss making asset in one subsidary.

dp

[Fuji Abound]

Based on the news reports it is the Group that are in Administration. DP is quite correct that were there only a single loss making company the Group would not be Administration and nor would the shares have been suspended.

The Admintrator will dispose of those assets he can for the best possible price he can achieve.

Albermarle would almost certainly be prepared to pay a premium for the airport because they own the commercial property. A deal has obviously been quickly done and on balance KPMG will feel it was a "good" deal doubtless taking into account the claims that would be made if the airport had remained closed for any length of time.

It would be interesting to know who controls Albermarle (I have not done any research) which might give a flavour for their ability to "re-generate" Shoreham and provide some comfort for the tenants that they are a sound a secure custodian and operator of the asset.

[niknak]

A quick Google search comes up with:
www.albermarle.com - supplier of specialist chemicals worldwide, and other companys of of the same name as, ticket agency in London, Gallery in London, piano supplier in London and a specialist furniture supplier.

Take your pick, although I would venture it's possibly the 1st.

[Justiciar]

If all elements of the group where in seperate companies, and only one of them was loss making, then you close that subsidary only. (As IO540 says, you usually pay off all the debts to save your name). The group would still be profitable and there would be no need to suspend the shares of the holding company.



This ignores the fact that in many groups there will be inter-company guarantees and composit guarantees and debentures in favour of banks and other lenders, so if there is external borrowing every company in a group will be a guarantor of the borrowing of every other company. This will result in a holding company being hit by, say, an insolvency of one of the subsidiaries and triggering the Holding Company's need to appoint an Administrator.

[julian_storey]

Shoreham appeared to be business as usual yesterday.

[Fuji Abound]

This ignores the fact that in many groups there will be inter-company guarantees and composit guarantees and debentures in favour of banks and other lenders, so if there is external borrowing every company in a group will be a guarantor of the borrowing of every other company. This will result in a holding company being hit by, say, an insolvency of one of the subsidiaries and triggering the Holding Company's need to appoint an Administrator.

No.

Whilst it is possible that cross guarantees and inter group loans of one company could cause the whole group to fail, for this to occur would amount to gross negligence by the Board.

In this case even if Shoreham had been operating at a loss it is inconceivable that the losses of Shoreham alone would cause the demise of the whole group.

[Jetscream 32]

DP - Shoreham was barely on the radar screen of debt compared with the rest of the eranicous portfolio which is not aviation related and certainly not enough to call in the administrators - but it was the one with no value but immediate ongoing costs....

[Justiciar]

No.Fuji: Yes

I can assure you that such arrangements are not uncommon when say subsidiaries raise finance and the bank insist on guarantees from both parent and subsidiary as well as charges or debentures on all assets. Whether such arrangements bring down a whole group will depend on a number of factors, such as liquidity of the parent.

I hasten to add that I don't know what the particular circumstances are at Shoreham - my comments are general ones to show how a loss making subsidiary could bring down the whole.

[dublinpilot]

DP - Shoreham was barely on the radar screen of debt compared with the rest of the eranicous portfolio which is not aviation related and certainly not enough to call in the administrators - but it was the one with no value but immediate ongoing costs....

JS,

That makes more sense, and would be as I expected. But obviously that other debt didn't come from profitable subsidaries ;) (You originally said that Shoreham was the only loss making asset.)

Justiciar,

This ignores the fact that in many groups there will be inter-company guarantees and composit guarantees and debentures in favour of banks and other lenders, so if there is external borrowing every company in a group will be a guarantor of the borrowing of every other company. This will result in a holding company being hit by, say, an insolvency of one of the subsidiaries and triggering the Holding Company's need to appoint an Administrator.

It does not ignore that fact at all. While such guarantees are not uncommon, they are rarely accepted when there isn't enough assets to back up the guarantee.

If all the subsidaries bar Shoreham were profitable, then it would be nothing short of gross incompetence to allow Shoreham to generate enough losses in such a short period of time to bring the whole group down. The other subsidaries must have been loss making too, and to a much bigger extent than Shoreham. JS says that the rest of the group had massive debt apart from Shoreham. Where did the debt come from if those other elements of the group were profitable?

It simply can't happen in such a way.

The statement but the only asset eracinous had that was loss making was Shoreham
simply does not stand up.

dp

[JW411]

By all accounts Erinaceous went to the wall with debts of £250 million. Are any of you out there seriously suggesting that Shoreham airport was a major cause of this huge outstanding sum?

I could believe that the airport might have run up debts of £2 million or so but nothing like the above.

[mark147]

You originally said that Shoreham was the only loss making asset.I think he was writing in the context of having asked about their aviation assets. Presumably there are lots of loss making non-aviation assets in which js32 had little interest.

[dublinpilot]

Mark,

If that's what he meant then that would make much more sense ;)

It's not what he said though, and he's had plenty of opportunity to correct what he's said. What he said was
but the only asset eracinous had that was loss making was Shoreham
Perhaps JS can clarify what he meant? If he did indeed mean that "the only aviation asset that eracinous had that was loss making was Shoreham" that could indeed be true.

dp

[Fuji Abound]

I can assure you that such arrangements are not uncommon when say subsidiaries raise finance and the bank insist on guarantees from both parent and subsidiary as well as charges or debentures on all assets. Whether such arrangements bring down a whole group will depend on a number of factors, such as liquidity of the parent.

I never said they were not (uncommon).

In fact the liquidity of the parent is unlikely to have very much to do with it. The parent company is often little more than a shell, with the real wealth of the Group dispersed around its subsidiaries. For an entire group to fail the failure will turn on position of the group consolidated accounts. For one small company (such as Shoreham) to bring down an entire group, whatever guarantees may or may not be in place, would occur only if there were far more serious problems through out the whole group.

I am lead to believe that at least some of the people involved with Abermarle are also involved with the Erinaceous Group. Albermarle would seem not to be a member of the Erinaceous Group but it might be interesting to know what related party transactions have taken place between the two (if any) and what plans Albermarle now have for the airport.

[cmacltd]

I think that observation is spot on. Fairoaks developed as 'exclusive residential development' would accord with the wishes of the local community. Just a matter of time