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28 January 2014 | Gurjit Degun
Leeds City Council has brought bankruptcy action against the former chairman of a property developer to recover legal costs after a failed procurement challenge.
In October 2013, the local authority was granted permission by the High Court to chase Jan Fletcher of Montpellier Estates for £2 million. The judge gave Fletcher until 14 November to pay the interim costs, pending a final decision on the total due, but she failed to meet this deadline.
Tom Riordan, chief executive of Leeds City Council, said: “[The judge] ruled [Fletcher] was personally liable after accepting she agreed in writing in advance to guarantee paying should her former company’s action against us be lost and Montpellier Estates Ltd were unable to foot the bill.”
When a person is made bankrupt, the court usually appoints an official receiver who is responsible for their assets. The receiver, who also acts as the trustee, sells the assets and distributes the money among creditors.
The case relates to a procurement process to find land and a developer to build an arena in Leeds. In February 2013 the local authority won a court battle in which Montpellier Estates had alleged the council had broken rules, breached an implied contract and had deceived the company to keep it in a procurement competition.
Riordan added the council has been “left with no choice” but to bring bankruptcy action. “We simply cannot afford not to actively pursue this cash for council taxpayers at any time, but never more pressingly than when we are having to significantly reduce our spending again after several years of budget cuts,” he said.
The bankruptcy hearing will take place at Harrogate County Court on 5 February.