The ex-Tiuta and Tiuta PLC (TPLC) directors, Gary Booth and Steven Nicholas — though rejecting the allegations made by the joint liquidators against them — have been ordered to pay £19.9m after the High Court found they had arranged a series of fraudulent loans.

Booth was appointed as a director of TIL in May 2006 and resigned in 2009, and had also been a director of TPLC.

Nicholas was also appointed as a director of TIL in 2006 and remained at his post until 2012, with sole responsibility for both TIL’s and TLPC’s legal department, but not its general affairs.

Tiuta went into administration in 2012, owing around £109.7m to investors after it used fund money to refinance high-risk short-term loans.

The lender’s main funder at the time had been the Connaught Income Series 1 Fund, which was operated by Capita until 2009, after which it was taken over by Blue Gate.

The fund — which had well over one thousand investors — was suspended in 2012 after a shortfall was discovered, with losses widespread.

•   The Finance Professional Show 2023: The Video
•   Together provides £88,000 facility for commercial property acquisition
•   The start of 2024 appears to be a 'window of opportunity' for housing market

In 2020, an independent review into the FSA and FCA’s handling of the Connaught Income Fund Series 1 found the FCA apologising for not acting more “promptly and decisively” to whistleblowers. 

Last month, the High Court heard how Booth and Nicholas had allegedly procured Tiuta to make loans to a property developer and his associates to preserve the liquidity of TPLC and its subsidiaries and to relieve financial strain on the group of companies.

The joint liquidators specifically alleged that the directors planned to raise cash through lending from the fund to permit the discharge of the outstandings to bank lenders to TPLC and its subsidiaries, thereby preserving the availability of facilities granted by those banks.

The joint liquidators argued that the pair not only had knowledge that the business Tiuta was undertaking was fraught with risk, but that the business could not succeed given the lending it had entered into.

The court documents read: “Both of the respondents had knowledge of that dishonest conduct and both participated in it. They both knew that the transactions that they were participating in were fraudulent.”

The two directors argued that they had always acted in the best interests of TIL and that the failure of the company came from the mismanagements and poor decision making of those who took over after they stepped down.