Company director disqualified
A DIRECTOR of a land banking company, wound up in 2012 in the public interest, has agreed to be disqualified for eight years.
John Mahon, 35, the director of CLS & Partners based at the Gemini Business Park, Warrington, has been banned for failing to make himself aware of the company’s business or keep proper books and records.
Mr Mahon’s disqualification follows an investigation by the Insolvency Service.
The probe found that CLS operated a land banking business selling small plots of land for investment in Yorkshire and Warwickshire.
Land banking is where a landowner divides its land into small plots, which are then sold to investors on the basis that large returns will be received if the land is re-zoned for potential development or planning permission is obtained.
The company was wound up by the Court on grounds of public interest in May 2012 following an investigation by the Insolvency Service authorised by the Department for Business.
Evidence provided by the Insolvency Service in the winding-up of CLS had shown the company had sold agricultural land in Wakefield and Studley, Warwickshire, to would-be investors on the pretext that this was suitable for development. And, that the land had potential for development and that the company or another party would apply for planning permission. There reality was that permission would never have been given for these purposes.
In giving the undertaking for his role in the company, Mr Mahon did not dispute that he allowed CLS to trade in a manner lacking commercial probity, failed to inform himself of the trade of CLS and failed to maintain or preserve proper accounting records.
The investigation showed that CLS sold plots of land at sites in Wakefield and Studley and between March 2010 and May 2011 sale agents acting on behalf of the company sold 78 plots for a total of £952,209.
The Insolvency Service also said Mr Mahon failed to monitor or take an interest in the information provided to prospective investors and as a result misleading and unfounded statements were made.
Investors who bought plots at the Wakefield site were made to understand that CLS or another party acting on its behalf would apply for planning permission. No applications were made and it is unlikely that a change of use would be allowed given that the site was greenbelt land.
Also investors who purchased plots at the Studley site were provided with information which implied that the land had potential for planning permission to be obtained for a housing development. The local council has stated that the likelihood of planning permission being granted was remote given that the land is in the greenbelt.
Futhermore the Official Receiver reported that it was unable to verify the purpose of payments totalling £541,281 and the company’s liquidator has been unable to trace motor vehicles acquired for £113,689.
Commenting on the disqualification, Ken Beasley, official receiver at the Insolvency Service’s public interest unit, said: “Mr Mahon allowed the company to mislead members of the public into purchasing plots of land for significant amounts of money based on the unfounded assertion that the plots had potential for planning permission.
“In failing to monitor or take an interest in the information provided to investors, Mr Mahon failed to discharge his responsibilities as a director of the company. The Insolvency Service will take tough action to put a stop to companies trading against the public interest and we will seek to remove culpable directors from the business environment.”
