THE founder of a major classic car dealership and his wife are being sued for £64m following the collapse of the business.
Derek and Sarah Hood are facing court action by the administrators of JD Classics, which was based in Maldon, Essex. The company, which restored and sold historic cars, was founded in 1987 and went on to have showrooms in Mayfair as well as California. It also became a sponsor of top racing events such as the Goodwood Revival. By 2015, Derek Hood had made the Sunday Times Rich List with a fortune put at £100m.
He sold a majority stake in September 2016 to private equity firm Charme Capital Partners for an undisclosed sum, with the accounts reportedly showing a market value of £106m for the cars that were on the books. However, it is claimed that ‘financial irregularities’ were found last year. Charme reduced the value of the assets, having calculated them to be worth less than shown before, but it wasn’t enough to stop the company from going into administration last September, as reported by Car Dealer.
The couple are now being sued by the administrators – Alvarez & Marsal Europe LLP – which claims in legal documents that prices were marked up on a number of vintage Jaguars to ‘create the false appearance of a vibrant market’, increasing their value for anyone wanting to buy them.
Among the examples given was a Jaguar XKD D-Type worth £650,000, according to advice from Sotheby’s to the administrators, but said to have been bought and sold eight times, which meant JD Classics was able to claim there had been sales worth more than £24m and profits at £7.25m. Another was a Ford GT40 Mk1 said by JD Classics to be worth £5.5m but was in fact ‘believed by the administrators to be closer to £2.52m based on a valuation’.
Both Derek and Sarah Hood deny there has been any wrongdoing by them. A legal adviser to the couple has labelled the claim ‘bizarre’ and said JD Classics used professional advisers that would have noticed ‘any illicit activity’. The Hoods will defend the claim, the legal adviser said, who in turn blamed Charme for the collapse of JD Classics, claiming that it had burdened it with a level of debt that was unsustainable.
The 60-odd jobs at JD Classics were saved when it was bought by Woodham Mortimer and started trading under that name.