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15.08.17

The Convent and the Convent in the Hills: provisional liquidation of a £7 million crowdfunding scheme

Mark Mullen acted for the Secretary of State on applications for a provisional liquidator to be appointed in respect of 13 companies involved in crowdfunding the acquisition and development of a former convent of Poor Clare nuns in Woodchester, Stroud (“the Convent”) and a further parcel of land in Norway (“the Convent in the Hills”) into hotel and leisure facilities.  Over £7 million was raised from individual investors.   More than £5 million was raised from investors in respect of the Convent project alone, on the basis of representations that the investments would be secured by shares in various companies that would own the properties.  In fact, the promised properties were not transferred into the ownership of the companies and, in due course, receivers were appointed over the properties by a fixed charge holder that had advanced monies to those behind the project.  A subsidiary company holding undeveloped land for the Convent in the Hills project in Norway had been placed into liquidation in that jurisdiction.

Mr Justice Roth considered representations from investors who had recently been appointed as directors of four of the companies concerned in the Convent project, who contended that they should continue to administer the companies’ affairs and negotiate a settlement with the fixed charge holder.  Alternatively, they identified their own choice of provisional liquidator.  The judge concluded, however, that all of the companies should be placed into the charge of a single person in view of absence of records and the lack of transparency in the operation of the companies.  He appointed the deputy official receiver as provisional liquidator of all of the companies.

The Lawtel Summary is available here and the Insolvency Service press release can be viewed here.

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