Insolvency Service (National): Three Directors of land banking company disqualified

Three directors of a property company that sold plots of land in Studley, West Midlands, in a land banking scheme have been disqualified for a total of 27 years.

The Secretary of State has accepted undertakings offered by Kevin Hilton of Moor Lane, Crosby, Merseyside, Lynne Hilton of Oak Drive, Burscough, Lancashire and Darren Butt of London disqualifying them from managing or in any way controlling a company or being a director for 12, 3½ and 12 years respectively following an investigation by The Insolvency Service’s Company Investigation team in Manchester into their conduct as directors of Land Strategy plc. Land Strategy plc was placed into liquidation on 30 July 2009, with an estimated deficiency to creditors of £78,900.

Kevin and Lynn Hilton were directors of the company from 8 December 2006 to 22 February 2008 and Darren Butt was a director from 22 February 2008 to 30 July 2009.

The company sold plots of land on a 38 acre green belt site at Studley in Warwickshire marketing the plots as having investment potential were planning permission obtained for the land. In reality the plots were effectively worthless.

The directors did not dispute that: -

1. Land Strategy plc (“Land Strategy”) caused its customers, by misrepresentation or by omission, to purchase the plots at an excessive overvalue, when they knew or ought to have known that there was little or no prospect of the plots achieving planning permission for residential development.

The land being sold was divided into 429 plots by reference to an estate plan. The land had cost of £6,579 . L per acre and Strategy sold the plots at prices ranging between £101,124 and £311,957 per acre, an average of £200,883. Land Strategy represented to its customers that the plots were an “investment” , but did not inform its customers that the land was subject to restrictive covenants limiting its use to agricultural use, and requiring the payment of 25% of any uplift in value were planning permission to be obtained and the contract terms were set up so that it would have been impossible to discover these covenants until they were bound into the contract. Land Strategy informed some of its customers that planning permission had been obtained or applied for parts of the site, when it had not. Subsequently the local authority refused an application for outline planning permission on one of the plots. During the period of Mr Hilton and Mrs Hilton’s directorship Land Strategy’s receipts totalled £975,952. During the period of Mr Butt’s directorship Land Strategy’s receipts totalled £1,932,000

In addition Mr Butt did not dispute that

2. He failed to ensure that Land Strategy maintained and/or preserved adequate accounting records or alternatively, he failed to deliver up such records to the Joint Liquidators. As a result it has not been possible to verify the purpose of cash withdrawals totalling £148,600 made between October 2008 and June 2009 nor transfers totalling £1,500,116 paid out of Land Strategy’s bank accounts between February 2008 and the date of liquidation .

3. From 19 May 2008 to 30 July 2009 he failed to ensure that Land Strategy complied with its statutory obligations to submit returns and make payments thereon to HM Revenue and Customs

Claire Entwistle, Director of Company Investigations North, says: -

“The directors of this company set out to sell worthless farm land at a massive profit to them, preying on members of the public with a hard sell and misleading information. The public need to be aware that a plot of land in a field may well not be an asset with investment potential and if promised returns appear to be too good to be true, they probably are. The public can also be assured that The Insolvency Service will take robust action when it becomes aware of any such land banking scheme. However as with any land purchase the public are advised to take independent legal advice before committing to any contract”

Notes to editors

1. Land Strategy PLC was incorporated on 8 December 2006. The company was placed into voluntary creditors liquidation in July 2009.

2. Company Investigations, part of the Insolvency Service, carries out confidential enquiries on behalf of the Secretary of State for Business, Innovation & Skills (BIS). All public enquiries concerning the affairs of the company should be made to: The Official Receiver, Public Interest Unit , Tel No 0207 637 1110: Email: piu.or@insolvency.gsi.gov.uk

3. The Insolvency Service administers the insolvency regime investigating all compulsory liquidations and individual insolvencies (bankruptcies) through the Official Receiver to establish why they became insolvent. The Service also authorises and regulates the insolvency profession; deals with disqualification of directors in corporate failures; assesses and pays statutory entitlement to redundancy payments when an employer cannot or will not pay employees; provides banking and investment services for bankruptcy and liquidation estate funds; and advises ministers and other government departments on insolvency law and practice. Further information about the work of The Insolvency Service is available from http://www.insolvency.gov.uk

4. Media Enquiries should be directed to:

Denise Rawls, Press Office Manager, Telephone 020 7674 6910 or

Ade Daramy, Press Officer on 020 7596 6187

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