PPE Medpro, the company linked to Baroness Michelle Mone, has been wound up following a court ruling that makes it unlikely the government will recover most of the £148 million owed over a failed pandemic PPE contract.
The Insolvency and Companies Tribunal ordered the company into liquidation on Thursday, just months after it lost a Supreme Court battle with the Department of Health and Social Care (DHSC) over the supply of 25 million surgical gowns during the Covid-19 crisis.
The ruling follows PPE Medpro’s decision to file for insolvency on September 30 – just a day before the Supreme Court ordered the £148 million to be repaid. The firm was a consortium led by Doug Barrowman, Lady Mone’s husband, and had won government contracts during the pandemic.
At Thursday’s hearing, lawyers for the joint administrators argued that the company should remain in administration to pay some creditors. However, the judge at the Insolvency and Corporate Court Sebastian Prentis rejected this approach and ordered the compulsory liquidation of the company.
“I remain firmly convinced that the right course of action now is to dismiss the insolvency administrators and forcibly wind up the company,” the judge said.
Court documents revealed that PPE Medpro’s liabilities go well beyond the DHSC ruling. HM Revenue & Customs is also suing the company over £39m in unpaid taxes, while administrators reported only around £600,000 was available to settle unsecured creditors’ claims.
Simon Passfield KC, representing the joint administrators, told the court that PPE Medpro has a secured creditor, Angelo (PTC) Limited, registered in the Isle of Man. He said the administrators assumed there was enough property in the company to repay around £1m to that creditor and suggested there could still be a return for unsecured creditors, including the DHSC.
Passfield also told the court that there were potential legal claims against third parties which, if successful, could result in “significant recoveries”, although no further details were disclosed.
However, the DHSC made it clear that it supported liquidation. David Mohyuddin KC, deputy representative of the department, said there was no realistic alternative given the company’s financial position.
“The court’s discretionary power to issue a winding-up order against Medpro is clearly limited: the company is clearly and significantly insolvent,” he said.
Legal experts said the decision leaves the government facing an uphill battle to reclaim taxpayer money. James Robertson, a dispute resolution partner at Spector Constant & Williams, said the recovery could depend on whether the government was prepared to fund further legal action against the company’s directors or its ultimate beneficial owner.
“It is notoriously difficult to pierce the corporate veil and take action against such individuals, particularly when assets are not permitted to be held in this jurisdiction,” he said, adding that the case risked becoming a “Pyrrhic victory” for the government.
Robertson also noted that the liquidation could increase pressure on the National Crime Agency’s long-running investigation into PPE Medpro and its principals, raising hopes that at least some of the public money could ultimately be recovered.
