The property developer at the centre of the collapse of a new build housing scheme at The Glassworks site in Manchester, which left dozens of would be home-owners out of pocket, has been disqualified from acting as a company director for six years.
Following a 12-month investigation by the Insolvency Service into his conduct while a director of CLH Holdings Limited and its subsidiary CLH ( Manchester) Limited, Justin Paul Chappelle Molloy, from Altrincham, has signed a disqualification undertaking banning him from managing or in any way controlling a company or being a director until 2015.
His companies entered administration just before Christmas in 2007 owing £3.2m and 57 individual purchasers lost deposits totalling £680,316 which had been paid to the company for off plan sales.
The director of investigations for the Insolvency Service, Vicky Bagnall, warned off-plan buyers to get advice before parting with a deposit. She said: "Bear in mind the possibility that your developer could become bankrupt. As with any property purchase, you should take appropriate professional advice before you part with any money. Look for a reputable developer with a proven track record and if possible a deposit guarantee scheme."
According to the disqualification investigation team in Manchester, the subsidiary company purchased the site at 1 Goulden Street, Manchester known as The Glassworks. Apartments were sold off plan and the companies accepted deposits of 7.5% of the purchase price per apartment from February 2007. A clause in the purchase agreement allowed the funds to be forwarded to the parent company rather than being held by the purchasers' solicitors as is usual under the Standard Conditions of Sale for residential property transactions.
Molloy and his connected company benefited from a series of payments of which £77,320 was paid when he knew that his prime funder was demanding repayment and the construction of the flats was seriously in doubt because of the insolvency of the development's builder.
In the disqualification undertaking signed by him and accepted by the Secretary of State for Business, Innovation and Skills, Molloy does not dispute that he caused the parent company to make payments to the detriment of the companies' creditors for his personal benefit and that of another of his companies.
His disqualification takes effect on 28 December 2009 and means he will be banned from either acting in the management of any company or from being appointed a company director, or in any way controlling a company, until 27 December 2015. If he breaches the undertaking he may be prosecuted.