The insurers of a UK student accommodation business formerly led by businessman Philip Marley have paid out more than £1 million (€1.2 million) to its creditors after a successful claim was made on a policy insuring against the actions of executives.
Chubb Insurance Company of Europe paid out this sum after appointing its own forensic accountants and loss adjusters to review what happened in the company, Space Student Living Ltd, where Marley was formerly chief executive.
Liquidator
This money has been given to accountancy firm Zolfo Cooper, the liquidator of Space, which will disperse the insurance payment to the company's creditors after its fees.
Space's biggest single creditor is a private equity fund called Maven Capital Partners which will receive the largest portion of the payment.
About a dozen students whose rent and deposits went missing will also be paid a substantial part of the money they are owed by the company.
Bill Nixon, managing partner of Maven which manages £300 million for pension funds and business people, said: "As the largest creditor of Space we are pleased to see our serious concerns about the conduct of Philip Marley have been confirmed following a forensic investigation and review. The misappropriation of company funds has been recognised and the insurance company has agreed to settle under the executive insurance crime policy."
Maven is also pursuing a legal action in Britain against Mr Marley seeking £2 million.
Mr Marley, who is now based between Miami and Europe, did not respond to requests for comment. He has previously denied any wrongdoing. Chubb, a major international insurance group, received a complaint alleging wrongdoing by Mr Marley under seven different headings over a year ago which, after reviewing it, has recently decided to pay out more than £1 million to creditors.
The first item in this complaint is that on August 6th, 2012, shortly before Mr Marley resigned as chief executive of Space, a payment of £260,000 was made out of the Space to another company controlled by the north Dublin businessman. This was done without telling Maven, his fellow shareholder in Space.
Student residences
The second issue related to the fact that when outside investors were initially asked to put £500,000 into Space in 2011, they were assured this would be used to acquire contracts to manage student residences in London which would deliver steady income. In reality the blocks investors were being asked to put their money into were close to going into default with their banks and this was not explained to investors.
A third complaint was made about a £110,000 credit card bill run up when Mr Marley was in charge of the company. Among the contested expenditure by the company was payments to tanning salons, fees to a pharmacy in Mayfair, and a trip to Las Vegas. Mr Marley has defended these expenses by claiming he visited tanning salons to treat a skin condition and the payment to a casino in Las Vegas was part of an investment road-show. Again, Mr Marley did not inform Maven of his plan to visit Las Vegas.
A payment of £279,000 to an interior design company by Space was raised as a serious issue in the insurance claim. This payment was described as being to fit-out and repair a student apartment block in London. However, the company this payment was made to turned out to be dormant.
