Hugh Osmond, the City entrepreneur behind Punch Taverns and PizzaExpress, is to be investigated over a deal to buy a small chain of bars from a travel company that collapsed earlier this year.
The probe will centre on a tiny deal, worth less than £200,000, struck by a company called Town and Field, where Mr Osmond is a director and shareholder.
It bought the Dick's Tea Bar chain, which operates in the French resorts of Chamonix, Méribel and Val d'Isère, as well as a hotel in Verbier, in May from the ailing ski travel company Brown Rock. Mr Osmond was a shareholder in Brown Rock and had been a director of the company until days before the deal.
A few weeks later, Town and Field sold the businesses on to the Mark Warner travel group.
Brown Rock was placed in receivership in July on the application of another City figure, the former British & Commonwealth chairman John Gunn. He was one of several high-profile investors on Brown Rock's shareholder register, along with Luke Johnson, who used to be Mr Osmond's business partner, and David Page, the former chief executive of PizzaExpress. All were tempted to invest in Brown Rock in the mid-1990s when it was promoted as a fashionable skiing holiday-related business.
Mr Gunn said he was concerned about how the company had been run and how it was dealing with creditors and felt obliged to have a receiver appointed.
The receiver, Mike Bowell of MBI Equity, a firm based in Guildford, Surrey, said he had concerns about the deal to sell Dick's Tea Bar to Mr Osmond. "I can confirm that that transaction will definitely be investigated because of the timing and because it was a transaction with a related party," Mr Bowell said.
One of the aspects he will be looking at is whether Mr Osmond was able to secure a bargain because of his close relationship with the company.
Mr Osmond denies that he made any money out of Dick's Tea Bar, saying he bought the business to help Brown Rock financially.
"This was a private investment in a company Hugh liked," said a spokesman for Sun Capital Partners, Mr Osmond's private equity business. "He acquired the bars in an attempt to keep the business afloat but in the end it was not enough. He paid a full price for the business as anyone who investigates will find out."
The price paid for Dick's Tea Bar was so small Mr Osmond could not remember the figure, a spokesman said. The exact price has not been released but is understood to be less than £200,000, a fraction of Brown Rock's debts which stood at over £2.4m when it went into receivership.
Martin Thompson, the chairman of Brown Rock, said the sale to Mr Osmond was a distressed deal, which the company contemplated only after two previous deals to sell the entire group had fallen apart. "In the environment we were in, any price was a good price," he said.
Mr Thompson, the former head of the travel group Abercrombie & Kent, was brought into the company in 2000 when it was already running into difficulty.
He entered into talks with one travel group in 2001 only for the deal to be dashed in the wake of the 11 September terrorist attacks, and then was close to selling Brown Rock to TUI, the German travel group, when the Iraq war intervened.
The assets of two of Brown Rock's businesses, Meriski and The Ski Company, were also sold before the group went into receivership. However, they were not sold to related parties and Mr Bowell is unlikely to investigate them.
Mr Osmond, 41, came to prominence when he joined with Luke Johnson in expanding and floating PizzaExpress. On his own, he struck a deal to buy Allied Domecq's pubs business, which floated as Punch Taverns last year, making him a multi-millionaire. He made an unsuccessful attempt earlier this year to stop the demerger of Six Continents.