Insolvency Service (National): Two unscrupulous land banking companies ordered into liquidation

The second of two connected companies that mis-sold green belt land for investment to the public, was ordered into liquidation in the High Court on 30 March 2011 following an investigation by The Insolvency Service.

The investigations by Company Investigations (“CI”) of the Insolvency Service found that UK Investment Consultancy Limited had made exaggerated and misleading claims regarding the investment potential of land at Chailey, Lewes, East Sussex.

Another company, Queensgate Consultants Limited, also misled the public regarding land it had sold but did not own at Wrockwardine Wood in Telford and in Bromley, Kent. Between them, the companies raises around £1 million from the public.

Investors were led to believe the plots they were buying had serious development potential. The investigation found this claim was not supported by any credible evidence.

Both companies are linked to land banking companies previously wound up on grounds of public interest following Insolvency Service investigations namely Pemberton International Ltd, Eldon International Ltd, Willow International Ltd and Allied Investment Management Limited .

Commenting on the cases Company Investigations Supervisor Chris Mayhew said:

“Companies that employ such tactics should know that The Insolvency Service can and will investigate and, where appropriate, take action to put them out of business”.

Potential investors should be mindful of the old adage; if it sounds too good to be true, it usually is”.

Notes to editor

1. UK Investment Consultancy Limited was incorporated on 15 October 2009. The registered office of the company is at Rutland House, 90-92 Baxter Avenue, Southend-on-Sea, Essex, SS2 6HZ. The sole director of the company until 10 February 2010 was Miss Ashley Marie Cunningham and thereafter Mr James Heary was recorded as sole director. The company has no secretary.

2. The company was formed shortly after the Secretary of State’s public interest petition was issued to wind up Miss Cunningham’s previous land banking company (Abacus Investment Management (London) Ltd - see 3 below). The company bought the land at Chailey, East Sussex for £32,000 from a property dealing company on 9 November 2009. The first plot was sold for £24,800 on 23 November 2009 and the remaining 56 plots sold in just over seven months thereafter generating total sales of £739,102. Over half of the income derived from these plot sales was expended on those making the sales on behalf of the company. Miss Cunningham received at least £85,000 in a little over 12 months from the company and also from another land banking company called Global Land Group Limited (see 4 below).

3. Abacus Investment Management (London) Ltd was linked to four other land banking companies, namely Pemberton International Ltd, Eldon International Ltd, Willow International Ltd and Allied Investment Management Limited, all of which were wound up on grounds of public interest on 31 March 2010 – see news release “High Court orders five land banking companies into liquidation”issued on 2 April 2010.

4. Miss Cunningham was also involved in Global Land Group Limited which was placed into creditors voluntary liquidation on 29 January 2010 with a reported deficiency to creditors of £34,909 having sold plots of land spread over at least six sites.

5. The petition to wind up UK Investment Consultancy Limited in the public interest was presented in the High Court on 24 February 2011 under the provisions of section 124A of the Insolvency Act 1986. The grounds for winding up the company were the lack of commercial probity and the serious misrepresentations made to potential investors about the potential development value of the land and the likely period (three to five years) in which investors could expect to receive a return on their investment. The company did not oppose the petition and was wound up on 30 March 2011.

6. In ordering the company into liquidation Mrs Registrar Derrett said:

“the director of the company Miss Cunningham has previously been involved in the so called land banking business with two other companies, firstly as a sales person for Global Land Group Limited which was also subject to a statutory investigation and is now in voluntary liquidation, and as a director of Abacus Investment Management (London) Limited which has already been wound up in the public interest. This is an important factor for the Court to take into account and I am satisfied that the evidence presented by the Secretary of State in this case fully demonstrates the company misrepresented the position using now familiar misleading statements. For example, in order to foster confidence in the site the company represented that it would itself retain 20-25 per cent of the plots, but then proceeded to sell all 57 plots within seven months. The plots were sold on average for £12,982, having been purchased by the company for the equivalent of £650 per plot. The company represented that, even without development, the value of the land would increase on average by 15 - 20 per cent a year, but even assuming that is the case it would take some 15– 20 years before a purchaser would recover the amount they invested. Miss Cunningham accepted that investors were told they could expect a return in 3 - 5 years. Some investors were told they could expect a return in 12 - 18 months and it seems one investor was told that the plots had outline planning permission and that he could expect a return of 300-400 per cent by Christmas 2010. The local authority has confirmed that the land is unlikely to be approved for development in the foreseeable future and the statements made by the company were plainly intended to deceive. I am satisfied that the company should be wound up on grounds of public interest and I do so order”.

7. Queensgate Consultants Limited was incorporated on 11 April 2008. The registered office of the company was at 3 More London, Riverside, London, SE1 2RE. On 20 May 2009 Miss Gulfidan Mehmet (a former employee of Pemberton International Ltd, now in liquidation) was appointed the sole director and company secretary. Miss Mehmet (also known as Valentine Lewis and Rose Brown) resigned as director on 1 October 2009 and was suceeded by Mr Sandip Sahota.

8. The company was set up by individuals who had worked at Pemberton International Ltd (in liquidation) whose customer database was used to obtain initial sales leads for the company. The company marketed plots of land that it did not own at sites in Telford and in Bromley in Kent. It received £230,014 from the sales of such land to the public from July 2009 to April 2010, most of which (£141,298) was expended on payments to the company’s recorded shareholders (Wayne Stubbs, Andrew Lang, Dean O’Neill, Charlie O’Neill and Philip Everhard) and employees and payments to the recorded officers Mr Sahota (£10,075) and Miss Mehmet (£12,201).

9. Tips for the potential investor:

• Professional looking brochure and web site - ignore the gloss and take time to do your own research, a simple search via a reputable search engine for the company name, the site and "land banking" will better inform you about the investment ‘opportunity’ being offered to you. If you do not have access to the internet, speak with the local planning office about the land in question and its likely prospects of receiving planning permission.

• Do not be pressured by the salesperson into a quick decision or rely on his/her advice. Robert Burns, the Head of The Insolvency Service’s Investigation and Enforcement Service says:

• “If something appears too-good-to-be-true, it very often is just that”.

• Always seek independent professional advice. Not someone recommended to you by the company as being ‘independent’.

• Do not be afraid to say no thank you (not one of the land banking companies we have investigated has resulted in any profit for the investor).

10. The petition to wind up the company in the public interest was presented in the High Court on 1 November 2010 under the provisions of section 124A of the Insolvency Act 1986. The grounds for winding up the company were the lack of commercial probity, misrepresentations, failure to keep or deliver up accounting records, failure to have an officer of the company in control of its affairs and abandonment. The company did not oppose the petition and was ordered into liquidation on 19 January 2011.

11. 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

12. All public enquiries concerning the affairs of the company should be made to: The Official Receiver, Public Interest Unit, 2^nd Floor, 3 Piccadilly Place, London Road, Manchester, M1 3BN. Tel: 0161 234 8531 Email: piu.north@insolvency.gsi.gov.uk

13. Media Enquiries should be directed to:

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

Ade Daramy, Press Officer on 020 7596 6187

Contacts

NDS Enquiries 
Phone: For enquiries please contact the issuing dept 
ndsenquiries@coi.gsi.gov.uk