Liquidators Hunt Down Destinations of Corran Cash
Investors’ heavy losses
Liquidators for Kayboo Ltd, the bust company originally set up to develop The Corran Hotel and Spa at Laugharne, Carmarthenshire, have identified 441 unsecured creditors, owed almost £11 million. The total amount lost by investors is reckoned to be around £17 million.
The liquidators’ costly work has been complicated by the financial practices employed by Kayboo.
Robert Dymond and Lisa Hogg, of Sheffield solicitors Wilson Field, reported this summer that there are “various investigation issues that the joint liquidators are currently reviewing, including the pre-packaged sale of the business, the dissemination of funds, potential misselling of the investments, and failure to register the property titles at the Land Registry”.
Investors in The Corran thought they were buying whole hotel rooms or fractions of rooms in a hotel undergoing major expansion, but a proposed development of holiday lodges was refused planning permission and hundreds of investors received nothing at all.
The liquidators say they analysed more than 10 bank accounts of the companies and associated parties. ‘The companies’ refers to Kayboo and sister company East Marsh Operational Co Ltd, which ran the hotel side of the business.
“Highly complex and time-consuming task”
“It should be noted that the companies utilised a number of bank accounts that were not held in the companies’ names, which has in turn made the tracing of funds through the companies a highly complex and time-consuming task,” the liquidators reported. “Our analysis revealed numerous intercompany transactions and payments to connected parties and individuals.”
Those connected parties and individuals are not being named yet because “the investigations may lead to legal action and therefore there is limited disclosure of information in order not to prejudice any subsequent legal action”.
So far, the liquidators have traced £12.39 million of investors’ funds coming in to the numerous bank accounts. The figure excludes payments in by cheque because the cheque originators are not shown on bank statements.
The travels of payments from investors included:
- £2.276 million paid to “a corporate entity connected by way of common shareholders and directors”. That entity is now in a creditors’ voluntary liquidation. A director offered the explanation that ‘payments were paid to the company to facilitate the distribution of investor payments on behalf of the company’.
- Another £1.884 million went to another connected corporate entity, also in creditors’ voluntary liquidation. Kayboo’s liquidators submitted a claim to the corporate entity’s liquidators, only to be presented with a counter-claim for £1.391 million for “legitimate commission agreements” outstanding when Kayboo was folded.
- The liquidators also refer to “commission payments made to numerous other parties”.
- £1.768 million went to a non-connected corporate entity also in creditors’ voluntary liquidation. This liquidator of the non-connected entity said the payments were genuine commissions. After considerable reluctance, this entity’s records were provided, but were “not as comprehensive as anticipated, given the level of transactions with the companies”. The next step was to be an analysis of bank accounts to try and determine if the funds received in were paid out to “any connected parties”.
- A particular individual connected to Kayboo received £649,290. That individual proffered an entitlement to sales commission and said they were still owed around £500,000.
The money gushing to commission agents suggests that little was left to actually build the hotel.
Investors in fractions of hotel rooms were also paying for the administration of the companies set up to manage those fractions. The liquidators found £355,000 paid to one entity for administration of the fractional companies formed to manage leases of rooms in The Corran. This seems generous considering that only THREE leases had been registered when Kayboo’s financial frailty resulted in its failure.
Kayboo, of which Peter William Burnett, County West Secretarial Services Ltd and Keith Michael Stiles are directors, made several other payments, detailed in the liquidators’ report, chiefly to entities “now subject to insolvency proceedings themselves”. The task of obtaining any redress for misled investors seems immense. Apart from the rapid loss of investors’ monies, the liquidators’ forensic work is expensive, ranging from £500 an hour for directors and insolvency practitioners down to £130 per hour for secretarial and support work.
Hotel bought back for £150,000
In October 2016 Glendore Real Estate Ltd, a company incorporated in February 2016, bought the hotel for £150,000 in a ‘pre-packaged’ deal with the original insolvency practitioners, HBG Corporate Ltd of Preston, Lancashire. The directors of Glendore Real Estate Ltd were Keith Stiles, also a director of Kayboo; Paul Manley; and County West Secretarial Services Ltd, of which Mr Manley was a director, and which was also listed as a director of Kayboo. The original directors of Glendore Real Estate have resigned and the sole director at October 11th 2018 was Mr Michael Nicoletti. Plustocks Ltd, which took over the hotel operations from East Marsh Operational Co Ltd, was dissolved in April 2017.
Investors’ anger at Glendore’s bargain purchase was an important factor in their decision to oppose the decisions being made by HBG, and to secure alternative liquidators who are readier to listen to their concerns. In their view HBG appeared to be treating the insolvency as the failure of a hotel business, not as the failure of an unregulated investment scheme.
Many investors put in money via SIPPs, self-invested personal pensions, or SSASes, small self-administered schemes for directors and companies. One of the names linking The Corran with pension investments is Rowanmoor, of Salisbury, Wiltshire, part of the Embark Group since July 2016. The major shareholder in Embark Group is Richard Wohanka, among whose directorships are Scottish Widows Group and several other companies within the Lloyds Banking Group, and other well-known active and defunct financial services institutions.
The name Rowanmoor has also cropped up in connection with fractional property sales by The Resort Group in the Cape Verde Islands, because the fees they charge have perplexed pension investors who are losing money on their illiquid and often nebulous purchases.
Who owns The Corran now?
The Corran is at present in the hands of Corran Resorts Ltd, a new company dating from November 23rd 2017 and with a registered address in Riverside Business Park, Swansea.
The owner of Corran Resorts Ltd now, in October 2018, is a Mr James Brown, born in December 1966 and currently 51 years old.