Landbanking company wound up for misleading investors
Surrey-based company, GLE & International Property Ltd, wound up in the High Court following an investigation by the Insolvency Service.
GLE & International Property Ltd sold plots of land to members of the public for investment purposes on the false and misleading basis that developers would then apply for planning permission, and purchase the entire site, thereby resulting in substantial profits for the investors.
The company sold plots of land on the following sites:
Hollins Farm, Red Lees Road, Burnley, Lancashire (the Burnley site)
Flax Lane, Lathom, Ormskirk, Lancashire (the Ormskirk site)
North of Hammondstreet Road, Cheshunt, Waltham Cross, Hertfordshire (the Cheshunt site)
GLE & International Property Ltd purchased plots on the Burnley site at £2.85 per square foot and immediately re-sold them to investors at £7 - £8 per square foot. Between August 2010 and November 2010 the company sold a total of 6 plots with an aggregate sales value of £70,440.
The company purchased plots on the Ormskirk site at £4.75 per square foot and immediately re-sold them to investors at £12 - £14 per square foot. Between December 2010 and February 2011 the company sold a total of 7 plots with an aggregate sales value of £99,952.
In respect of the Cheshunt site, the company purchased the plots at £2.45 per square foot and immediately re-sold them to investors at £12 per square foot. Between May 2011 and November 2013 the company sold a total of 74 plots with an aggregate sales value of £866,100.
The investigation found that none of the sites had been developed and that no applications for planning permission had even been made. Enquiries made of the relevant Local Authorities established that the respective sites were within designated green belt areas and were thus highly unlikely to be granted planning permission for development. Indeed, Broxbourne Council had issued a press release in February 2012 headed ‘Land Scam in the Hammondstreet Area of West Cheshunt’ warning against investment in the Cheshunt site, stating:
The Council …. would like to make the following points clear: firstly, the land in question is in the green belt, where national planning guidance and local planning policies make it clear that there is a strong presumption against development. Secondly, the land in question is not allocated for development and does not have planning permission for any form of development.
West Lancashire Borough Council had issued a press release in similar terms in August 2010 when it became aware that plots of land were being sold on the Ormskirk site.
Insofar as the Cheshunt site is concerned the plots of land were purchased by GLE & International Property Ltd from JDG Properties Ltd and the purported developer of the site was Tithebarn Trading Ltd. JDG Properties Ltd had purchased the land at £0.33 per square foot. It then sold plots of the land to GLE & International Property Ltd at £2.45 per square foot and GLE & International Property Ltd had immediately sold them on to investors at £12 per square foot. Investors were told that the developer, Tithebarn Trading Ltd, would buy their plots at £52.43 per square foot subject to planning permission having been obtained. Investors were not told that JDG Properties Ltd and Tithebarn Trading Ltd were under common ownership and control.
The investigation found no commercial or legitimate reason why Tithebarn Trading Ltd would be prepared to buy back the plots at £52.43 per square foot when its associated company, JDG Properties Ltd, had sold them (via GLE & International Property Ltd) at £2.45 per square foot.
JDG Properties Ltd and Tithebarn Trading Ltd were previously wound up on 3 July 2015 on the grounds that they had operated against the public interest.
Commenting on the case, Colin Cronin, Investigation Supervisor with the Insolvency Service, said:
As invariably happens with landbanking cases of this type the only people who profited from the company’s trading were those involved in the sale of the land to investors and those who recruited or otherwise introduced investors to GLE & International Property Ltd and who received significant commission payments for doing so.
The plots of land were sold to investors on the false basis that there were developers waiting in the wings to obtain the necessary planning permission and to develop the land, something which would result in a substantial uplift in the value of the plots. The reality is that there were no arrangements with genuine developers in place and no steps were ever taken to apply for planning permission.
The net result is that investors have paid highly inflated prices for plots of land which they are powerless to deal with on an individual basis.
These winding-up proceedings show that The Insolvency Service will take firm action against companies which mislead the public in this way.
Notes to editors
GLE & International Property Ltd – company registration number 07052772 - was incorporated on 22 October 2009. The company was formerly known as the Best Inn Cape Verde Ltd (until 23 November 2009) and as The Best in Cape Verde Ltd (until 13 July 2010). The company’s registered office was at Allen House, 1 Westmead Road, Sutton, Surrey SM1 4LA.
The petition to wind-up GLE & International Property Ltd was presented under s124A of the Insolvency Act 1986 on 9 May 2016. The company was wound up on 30 June 2016 and the Official Receiver has been appointed as liquidator.
Company Investigations, part of the Insolvency Service, uses powers under the Companies Act 1985 to conduct confidential fact-finding investigations into the activities of live limited companies in the UK on behalf of the Secretary of State for Business, Innovation & Skills (BIS). Further information about live company investigations is available.
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Published: 17 August 2016
From: The Insolvency Service