Two North-West based landbanking companies that sold plots of agricultural land to members of the public have been wound-up in the public interest following an investigation by Company Investigations of The Insolvency Service.
CLS & Partners Limited and Sterling Mortimar Limited operated a landbanking business selling small plots of land situated in Wakefield to investors. Prospective investors were told that CLS & Partners Limited would pursue planning permission for residential development of the land with a view to selling the Wakefield site in its entirety to a developer. It was claimed that obtaining planning permission would result in a ‘tenfold increase’ in the value of the plots.
The investigation found that the companies had made no application for permission to develop the Wakefield site and that, had they done so, it was extremely unlikely that permission would have been granted by the Council. Sales agents acting on behalf of the companies misinformed investors that planning permission had already been obtained or would be taken care of by CLS & Partners Limited.
At least 74 plots were sold to investors for amounts totalling £924,614. All of these funds were subsequently spent by CLS & Partners Limited and its bank account was closed in November 2011. Inadequate accounting records kept by the company meant that much of this expenditure was unexplained. In particular, the accounting records contained no explanation as to why investor funds had been used to purchase motor vehicles from auctions to a value of £212,089 and why amounts totalling £483,591 had been paid to an associated company, Curved Ball Limited, which was dissolved in November 2011.
Commenting on the case, Claire Entwistle, Director of Company Investigations North, said,
“These companies induced members of the public to purchase plots of land by falsely claiming that planning permission was imminent and that the land would increase in value significantly. I would urge anyone who is approached to invest in land in such circumstances to take time to reflect, seek independent advice and research the company in question. In particular, don’t be afraid to say “No thank you”. If a scheme sounds too good to be true, it usually is.”
Notes to Editors
1. Landbanking is a practice whereby agricultural land, often situated in the green belt, is bought at nominal value, then divided into smaller plots and sold on to investors for a substantial mark-up on the basis of representations that large returns will be received if planning permission is granted.
2. CLS & Partners Limited was incorporated on 18 February 2010. Its registered office is at 4 Webster Court, Warrington WA5 8WD.
3. Sterling Mortimar Limited was incorporated on 22 September 2009. Its registered office is at 11 Hesketh Park Mansions, Queens Road, Southport PR9 9JE.
4. The petitions were presented under s124A of the Insolvency Act 1986 on 21 March 2012. The Official Receiver was appointed as provisional liquidator of the companies on 29 March 2012 and the companies were wound up on 9 May 2012.
5. Company Investigations, part of The Insolvency Service, carries out confidential enquiries on behalf of the Secretary of State for Business, Innovation & Skills (“BIS”).
6. 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.
7. All public enquiries concerning the affairs of the company should be made to: The Official Receiver, Public Interest Unit, 2nd Floor, 3 Piccadilly Place, London Road, Manchester, M1 3BN. Tel: 0161 234 8531
Further information about the work of The Insolvency Service is available from www.insolvency.gov.uk
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