Today is the High Court’s deadline for a firm linked to Baroness Michelle Mone to repay £122m for supplying defective PPE at the height of the pandemic, with no indication the Department of Health and Social Care (DHSC) will be paid in full.
PPE Medpro, the company founded by her husband Doug Barrowman and introduced to a “VIP lane” for providers by the Conservative peer, has until 4pm to make the payment.
While Mr Barrowman has described himself as the “ultimate beneficial owner” of PPE Medpro, and says £29m of profit from the deal was paid into a trust benefitting his family, including Baroness Mone and her children, he was never a director and the couple are not personally liable for the money.
PPE Medpro filed for insolvency the day before Mrs Justice Cockerill’s finding of breach of contract was published, and the company’s most recent accounts show assets of just £666,000.
Court-appointed administrators will now be responsible for recovering as much money as possible on behalf of creditors, principally the DHSC.
Last week, Mr Barrowman’s spokesman said “consortium partners” of PPE Medpro are “prepared to enter into a dialogue with the administrators of the company to discuss a possible settlement with the government”.
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The PPE scandal surrounding Michelle Mone explained
Sky News understands the consortium met last week and has contacted the administrators to request they facilitate a negotiation with the government.
Mr Barrowman’s spokesman did not specify how much they would be willing to offer by way of settlement, but in June PPE Medpro offered to settle the case for £23m.
The DHSC rejected that offer, but with the company in administration and potentially limited avenues to recover funds, there is a risk the government may recover nothing while incurring further legal expenses.
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What happened during the pandemic?
In June 2020, PPE Medpro won contracts worth a total of £203m to provide 210 million masks and 25 million surgical gowns after Baroness Mone contacted ministers, including Michael Gove, on the company’s behalf.
While the £81m mask contract was fulfilled, the gowns were rejected for failing sterility standards, and in 2022 the DHSC sued. Earlier this month, Mrs Justice Cockerill ruled PPE Medpro was in breach of contract and liable to repay the full amount.
Mr Barrowman has previously named several other companies as part of the gown supply, including two registered in the UK, and last week his spokesman said there was a “strong case” for the administrator to pursue them for the money.
One of the companies named has denied any connection to PPE Medpro and two others have not responded to requests for comment.
What could government do about it?
Insolvency experts say administrators and creditors, in this case the government, may have some recourse to pursue individuals and entities beyond the liable company, but any process is likely to be lengthy and expensive.
Julie Palmer, a partner at Begbies Traynor, told Sky News: “The administrators will want to look at what’s happened to what look like significant profits made on these contracts.
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“If I was looking at this, I would want to establish the exact timeline, at what point were the profits taken out.
“They may also want to consider whether there is a claim for wrongful trading, because that effectively pierces the corporate veil of protection of a limited company, and can allow proceedings against company officers personally.
“The net of a director can also be expanded to shadow directors, people sitting in the background quite clearly with a degree of control of the management of the company, in which case some claims may rest against them.”
A spokesman for Forvis Mazars, one of the joint administrators of PPE Medpro, did not comment other than to confirm the firm’s appointment.
The DHSC was approached for comment.
