The Sunday Telegraph - Business & Money

Accountant­s raise concerns over dividend paid to Dixon’s IWG

- By Russell Lynch

ACCOUNTANT­S have raised concerns after a £635m dividend was paid to IWG billionair­e Mark Dixon’s company by a Jersey subsidiary which was then put into bankruptcy.

An Ernst & Young review of the controvers­ial decision to place Regus plc into bankruptcy in September 2020 is to be followed up with a further investigat­ion into whether the money should have been paid out, court documents show.

Regus plc had guaranteed £790m of landlords’ leases on serviced offices occupied by IWG if it was unable to pay its rent. However, the dividend payment shortly before Covid struck meant there was little money left to reimburse landlords as lockdowns were imposed and IWG sought rent cuts. The subsidi- ary was then put into bankruptcy.

The Royal Court of Jersey transferre­d the handling of the bankruptcy to Luxembourg, where officials have more limited power to investigat­e.

Landlords led by New York property firm Vornado have failed in their bid to get jurisdicti­on moved back to Jersey.

But the Jersey court’s ruling revealed that the Luxembourg bankruptcy trustee, Nicolas Thieltgen, will conduct further investigat­ion into the dividend payouts after receiving a draft report from Ernst & Young.

The ruling said: “The trustee went on to say that their review of the draft Ernst & Young report suggests that there ‘are matters of concern in relation to the 2019 distributi­ons that require further investigat­ion. For the avoidance of doubt, the trustee confirms that he is committed to conducting all such further investigat­ions’.”

A previous report to Vornado from Ey-parthenon, the accountant’s management consultanc­y arm, also flagged the dividend payout as an area for investigat­ion.

The report, seen by The Sunday Telegraph, said: “In the light of Regus’ limited income generating capacity, and the impact of the Regus distributi­on on its financial position, it would be necessary for an officehold­er to investigat­e or understand the basis on which Regus’ directors determined that the landlord guarantees should remain with Regus.”

Witness statements submitted to the September hearing by Glen Weiss, Vornado

vice-president, labelled the insolvency as “sudden and suspicious”.

Mr Weiss accused IWG of “using its position to force landlord beneficiar­ies to accept materially worse terms than they originally (and appropriat­ely) agreed”, as well as changing the name of the subsidiary to “Redox plc” days before the original applicatio­n for bankruptcy in “what appear to be deliberate attempts … to prevent their creditors from learning about these processes”.

IWG and Mr Thieltgen declined to comment.

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