Two North West landbanking companies that sold plots of agricultural land to members of the public have been wound up in the public interest following an investigation by the company investigations department of the Insolvency Service.
CLS & Partners, of Webster Court in Warrington, and Sterling Mortimar, registered in Queens Road, Southport, operated a landbanking business selling small plots of land situated in Wakefield to investors. Prospective investors were told that CLS & Partners would pursue planning permission for residential development of the land with a view to selling the Wakefield site in its entirety to a developer. It was claimed that obtaining planning permission would result in a 'tenfold increase' in the value of the plots.
The investigation found that the companies had made no application for permission to develop the Wakefield site and that, had they done so, it was extremely unlikely that permission would have been granted by the council. Sales agents acting on behalf of the companies misinformed investors that planning permission had already been obtained or would be taken care of by CLS & Partners.
At least 74 plots were sold to investors for amounts totalling £924,614. All of these funds were subsequently spent by CLS & Partners and its bank account was closed in November 2011. Inadequate accounting records kept by the company meant that much of this expenditure was unexplained. In particular, the accounting records contained no explanation as to why investor funds had been used to purchase motor vehicles from auctions to a value of £212,089 and why amounts totalling £483,591 had been paid to an associated company, Curved Ball, which was dissolved in November 2011.
Claire Entwistle, director of company investigations North at Insolvency Service, said: "These companies induced members of the public to purchase plots of land by falsely claiming that planning permission was imminent and that the land would increase in value significantly. I would urge anyone who is approached to invest in land in such circumstances to take time to reflect, seek independent advice and research the company in question. In particular, don't be afraid to say 'no thank you'. If a scheme sounds too good to be true, it usually is."