There are always a number of controversies within the world of business, and one of the most prevalent recently has been the investors who managed to lose £8 million in a care home property scheme. They were duped into paying out for plans to convert 80 apartments in County Durham. These plans were never going to be completed, as was found out following investigations triggered by insolvency.
What is Insolvency?
Insolvency is a common term where companies can no longer meet the financial obligations they owe to their different lenders and creditors. When they have many debts outstanding and cannot make the right amount of income to pay off these debts, the company is deemed insolvent. Before insolvency proceedings begin, an organisation will probably likely try to set up payment plans with their creditors where they can agree on a monthly amount that will be paid in order to meet their financial liabilities. If no agreement can be made, then insolvency proceedings begin.
The Insolvency Process
As discussed above, insolvency is a state of financial distress where an organisation cannot pay their bills. Insolvency proceedings will often be instigated when a business finds itself in this position, and this involves a few different elements before the company is closed down. One of the main stages is an investigation into the business and how it got into its current financial position. This will mean going through an organisation’s finance and putting together a list of all of its creditors, not to mention looking at the previous happenings of the business. The insolvency proceedings of CHF 9 led to the discovery that the investors of £8 million into the business were paying for plans that were never going to come to fruition.
Who Are CHF 9 Limited?
CHF 9 Limited is an organisation that has frequently traded to secure investment and build studios and apartments. One recent project they took on involved a care home property scheme near Bishop Auckland in County Durham. CHF 9 Limited confirmed that they planned on reconstructing a care home to build and convert a further 80 apartments. To go forward with these plans, they needed to secure investment. They managed to secure £8 million from different vendors.
What Happened with the Plans?
The company CHF 9 Limited became insolvent, and as a result, this triggered an investigation into the business. Following this investigation, it was revealed that the company had bought the building they planned to convert for £850,000; however, upon applying for planning permission, they were turned down. Rather than agree to the 80 proposed by CHF 9 Limited, the council suggested that around 10 – 15 studios would have been much more appropriate.
Despite the rejected planning permission, the company still reached out to people for further investment. They managed to raise millions under the false pretences of their plans whilst knowing that the 80 studios would never get built. Not only that, but the director Sean Murray didn’t use the investments he received very wisely.
Sean Murray Spending
Not only were there question marks raised over the fact that CHF 9 Limited continued to seek investment despite not receiving the correct planning permission, but there were also questions raised because a lot of the money wasn’t even paid into CHF 9 Limited’s accounts. Instead, £3.3 million was paid to a company connected with CHF 9. On top of that, another £2.8 million was paid to the company’s solicitors, before finally £1 million was actually contributed towards the organisation’s accounts.
After looking into the spending of the money, rather than using it to further his business, Sean Murray used it to fund an incredibly lavish lifestyle. Sean Murray, a man one of his former colleagues describes as having a “limp handshake and an obsession with designer clothes,” used investors’ money to buy supercars, a yacht and a private jet which he used to fly all over the world. Murray tried to defend these purchases, stating they were necessary to service the company’s wealthy clientele; however, many different sources have confirmed that Murray used them for his own personal gain.
Since this investigation, the cars, yacht and jet have all been seized with a view to selling them to help pay back the investors. Murray also owned two luxury homes, which are expected to be treated similarly.
As a result of the misinformation provided to investors, as well as the fact that the money provided was used by Sean Murray personally rather than to carry out the work that he had eluded to, he has been banned for ten years. This means that he cannot take part in the formation of a company and a company’s promotion, management or consultation unless a court approves otherwise.
Robert Clarke, the chief investigator in this claim, found that most investors would not have provided any money if they knew that CHF 9 Limited didn’t have planning permission. He added, “Sean Murray has rightfully been removed from the corporate arena for a significant amount of time,” before continuing, “this should serve as a stark warning for potential investors to do your due diligence, as well as making clear to directors involved in investment schemes that we have the powers to disqualify you from running limited companies.”
Do You Need Advice Surrounding Insolvency?
If your organisation is currently insolvent and you would like advice on the best way to move forward, then you should enlist the help of Simple Liquidation. At Simple Liquidation, our team of experts will be able to consider your company’s current financial position and history to advise you on the best way to move forward. If you have any questions or require further information, do not hesitate to get in touch.