Directors receive lengthy bans in land banking scheme
A PAIR of North West directors have received bans totalling 15 1/2 years from the insolvency service for their part in the collapse of a company which sold land plots in the West Midlands.
Despite owing just £78,900 to its creditors, the lengthy bans follow an investigation into Land Strategy plc which was wound up two years ago following a creditors’ voluntary liquidation.
The company had sold plots of land on a 38-acre greenbelt site at Studley in Warwickshire. It had marketed the plots as having investment potential if planning permission were obtained for the land. However, the unlikelihood of this occurring meant that the plots being sold were effectively worthless.
The Insolvency Service’s investigation found that Land Strategy plc caused customers to buy land at overinflated prices either by misrtepresentation or by omission of certain facts when they knew there was little or no prospect of the land ever being granted planning approval for residential development.
The company was run by Kevin Hilton of Moor Lane in Crosby and Lynne Hilton of Oak Drive in Burscough between December 8 2006 and February 22, 2008, and then by Darren Butt of London until its closure in July 2009.
The land cost £6,579 per acre but was sold to investors at prices ranging from £101,124-£311,957 per acre, with an overage of just over £200,000 per acre. During the Hiltons’ ownership it raked in almost £1m in proceeds and in butt’s 16-month tenure it secured almost £2m of investors’ money.
The directors did not dispute the details of the case and Kevin Hilton has been disqualified from owning or managing a company for 12 years, while Lynne Hilton has been banned for 3 1/2 years. Darran Butt has also received a 12-year ban.
Claire Entwistle, a director of the Insolvency Service’s Manchester-based Company Investigations unit, said: “The directors of this company set out to sell worthless farm land at a massive profit to them, preying on members of the public with a hard sell and misleading information.
“The public need to be aware that a plot of land in a field may well not be an asset with investment potential and if promised returns appear to be too good to be true, they probably are.
“The public can also be assured that The Insolvency Service will take robust action when it becomes aware of any such land banking scheme. However, as with any land purchase the public are advised to take independent legal advice before committing to any contract.”
Kevin Lucas, a Manchester-based partner in insolvency firm BCR said; “It’s interesting to note that despite the loss to creditors being relatively small, the directors were still disqualified for their unfit actions.
“Many people believe that if creditors do not lose out in an insolvency or liquidation for a significant sum the directors will face no action.
“However this case highlights the risks of not acting with good faith. Disqualifications over 5 years are considered very serious, and anything over 10 is reserved for the most serious of cases.”
