RTM Company wants to quit but freeholder refuses to accept management

by Readers Question

11:02 AM, 29th November 2016
About 3 years ago

RTM Company wants to quit but freeholder refuses to accept management

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RTM Company wants to quit but freeholder refuses to accept management

We have been RTM for 4 years and started off with 8 Directors. We have been at legal loggerheads with our freeholder – whom insists that we are not managing the building properly and has threatened taking legal action against the RTM Company and several leasees whom are in breach of covenant. As a result of the stress that this has put everyone under, 6 Directors (including our Chair) have resigned in the last 3 months. The remaining 2 (of which I am one) want to resign also!responsibility

The problem is that our freeholder has stated on several occasions that he does [I]not[/I] want to take over management of the building and that he would rather see the building under the control of a court appointed manager. The reason he gave for this is that there is ‘too much ground work to be done to put matters straight in the building’ and he does not have the interest or resources to do this (even with his own choice of managing agent in place). I have the following questions:

1. Can the remaining 2 RTM Co. Directors resign anyway, thereby forcing our freeholder to take on management against his wishes?
2. Knowing that our freeholder does [I]not[/I] want to accept management, do the lessees have to seek the appointment of a manager first before the remaining 2 RTM Co. Directors can quit?
3. The reason given by the other 6 RTM Co. Directors whom have already resigned is that they do not want to be in the cross-fire of our freeholder’s legal action against the RTM Co. Do their resignations actually absolve them from liability for any errors and mistakes they made whilst they were Directors?

Oh, and before you ask …

A. No, we are not insolvent
B. Yes, we have had an ARMA registered managing agent working for us for the last 4 years
C. Yes, we have overlooked certain aspects of the management of the building – there are a handful of lessees in breach of covenant; some repairs have gone undone and the building was found to have been under-insured by 1.5 million pounds, for 4 successive years

Many thanks

Vivienne



Comments

Gary Nock

9:10 AM, 6th December 2016
About 3 years ago

Look at your articles and see if it allows co-opting non-leaseholders onto the board. Then bring somebody in who will stand up to these bullies who call themselves ex directors. Which part of the country is this Vivienne?

Vivienne Somerville

9:32 AM, 6th December 2016
About 3 years ago

Reply to the comment left by "Gary Nock" at "06/12/2016 - 09:10":

I have scoured the articles and unless I am reading them wrong, there is no mention of co-opting non- leaseholders onto the board. Elsewhere however it mentions that Directors may delegate their powers to other individuals but I don' think that this is the same thing as co-opting (or is it?)

We are in the South East, by the coast ....

Gary Nock

9:38 AM, 6th December 2016
About 3 years ago

Vivienne what is the name of the RTM Co and I will try and look online to check articles and mems for you.

Vivienne Somerville

9:44 AM, 6th December 2016
About 3 years ago

Reply to the comment left by "Gary Nock" at "06/12/2016 - 09:38":

Thank you for your generous offer to look at the mems and articles for me but I would rather not state the name of the RTM Co. in open forum. I would be happy to email the mems and articles to you though (anonymised of course).

Gary Nock

9:46 AM, 6th December 2016
About 3 years ago

I was going to suggest that Vivienne. If you go to my business profile you will find contact details via my website.

Vivienne Somerville

10:30 AM, 6th December 2016
About 3 years ago

Reply to the comment left by "Gary Nock" at "06/12/2016 - 09:46":

I have just emailed it to you. Thanks again.

Gary Nock

12:07 PM, 6th December 2016
About 3 years ago

Thanks Vivienne. I will have a look and get back to you today.

Gary Nock

12:37 PM, 6th December 2016
About 3 years ago

Vivienne I cannot see anything that precludes a person being a director who is not a member. The Mem and Arts are the standard RTM ones which also enable managing agents in an emergency to become directors.

"Methods of appointing directors-( 1) Any person who is willing to act as a director, and is permitted by law to do so may be appointed to be a director-(a) by ordinary resolution or(b) by a decison of the directors"

Basically a director can nominate a person who wishes to act as a director, and is not disqualified under the Companies Act - e.g a bankrupt, disqualified director etc. I have volunteered myself without being a leaseholder on two occasions when there were "issues" with an RTM and things needed sorting.

So there is no reason why you cannot "co -opt" someone on to assist with the skills required to steady the ship.

Vivienne Somerville

14:11 PM, 6th December 2016
About 3 years ago

Reply to the comment left by "Gary Nock" at "06/12/2016 - 12:37":

Thanks for letting me know

Kate Mellor

14:34 PM, 6th December 2016
About 3 years ago

It's an unenviable position you're in Vivienne & you certainly have my sympathies.

I guess it's important to evaluate what the Freeholder actually has the power to demand and what they don't. It's all very well saying they want major building works, but are they over stepping? Is it possible to have a report done to evaluate what is essential work and what is simply the freeholders wish list? Can you stagger essential works over a period of years to spread the costs? No doubt you've considered these points.

These kinds of stories do make me realise what a can of worms you can be buying into with these big blocks..

I'm glad to see you're getting some help and advice on here from someone with expertise in this area as it's such a complex one. I wish you all the best trying to come to a resolution all parties can live with.

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