More Bad News for Corran Investors
News: Craze for Selling Hotel Rooms Set to Subside
The cruelly severe virus Covid-19 has, by forcing governments to close hotels, restaurants, indeed all venues where people are likely to be in close proximity, made it a lot harder for over-optimistic entrepreneurs to entice investors to part with savings to purchases leases of hotel rooms.
Investors in The Corran Resort & Spa, Laugharne, Carmarthenshire, are unlikely to receive a penny of their investments back, three years after the failed property company Kayboo Ltd entered liquidation with Lisa Hogg and Robert Dymond of Wilson Field Ltd, Sheffield.
In addition, the liquidators reported his month, May 2020, that one of Kayboo’s two directors has died of Covid-19.
An investor in The Corran has told West Wales News Review that the liquidators are uncertain whether any monies will be recovered. Kayboo Ltd, and its sister company East Marsh Operational Co Ltd, should have stopped trading in 2015, when it was clear that the business was in trouble, but the directors accepted investments of a further £500,000. Large payments were made to third parties, both connected and unconnected, without evidence of work done or services rendered, but given the bankruptcies of a number of these third parties, those payments appear to have disappeared beyond the reach of creditors.
So far, only nine investors have received compensation from the Financial Services Compensation Scheme, probably because their investments were placed in pensions, which are regulated, while non-pension investments in buyer-beware property schemes are unregulated.
The liquidators are dealing with 278 claims from unsecured creditors, totalling £14.429 million. In addition, a further 151 creditors, owed £3.155 million, have not submitted claims.
The debacle at The Corran was just one of several such schemes. Northern Powerhouse Developments sold hotel room investments in Wales and England, including in the Fourcroft Hotel on the seafront at Tenby, and has been in administration with Duff & Phelps, Manchester, since August 2019. Northern Powerhouse Developments was also behind the ambitious plans for the Afan Valley Adventure Resort in Neath Port Talbot.
More recent still, a small Essex company called Sterling Woodrow Ltd acquired the Stradey Park Hotel, Llanelli, from its retiring proprietors, raising money from investors by selling off interests in individual hotel rooms.
The long-term repercussions of Covid-19, at least until an effective vaccine is developed, are likely to include a reluctance to stay in hotels or to eat in busy restaurants, so once they are allowed to reopen, hotels will face an uphill task to achieve profitability, and investors in hotels will need bucket-loads of patience.
The search terms Corran, Northern Powerhouse Developments, Afan Valley and Stradey Park will bring up past articles on these topics.
A fool and his/her money easily parted…. hardly news!
Somewhat harsh, I think — these are international networks whose members are generally one or two or even three steps ahead of the law. It’s bad for business confidence and for the international reputation of the UK, surely. Not that it could get much lower at present.