Bankrupt banned over £4m pop-up investment
13 Mar 2020
A director who gifted close to £4m worth of investments in pop-up hotel company, while he was an undischarged bankrupt, has been banned for 11 years
13 Mar 2020
Neil Burns, from Windsor, Berkshire, did not attend the High Court in London and was handed the 11-year directorship disqualification in his absence.
The court heard that Burns was a director of an investment company, B52 Investments Ltd. Incorporated in November 2010, the company was charged with holding and managing investments into a separate company, Snoozebox Holdings Plc – a pop-up hotel company which used recycled shipping containers.
B52 Investments held 6.1m shares in Snoozebox Holdings and received at least £3.3m worth of loans and investments from investors, as well as £1.7m worth of bank receipts into the company’s accounts.
But the directors of B52 Investments abandoned the company after transferring all of B52 Investment’s shares in Snoozebox Holdings to connected third parties, resulting in the company’s liquidation.
B52 Investment’s liquidation then brought the company to the attention of the Insolvency Service after the directors failed to co-operate with the liquidator or deliver up books and records.
During enquiries, B52 Investment’s directors were unable to satisfactorily explain £3.9m worth of transactions and the transfer of the 6.1m shares the company held in Snoozebox Holdings.
Following further enquiries, investigators discovered that Burns had been bankrupt three times, the latest coming in 2013 and had not been discharged from his restriction.
As a bankrupt, Burns was banned from managing companies but not only did he remain managing B52 Investments, he actively entered into agreements with investors while transferring their funds to connected third parties and family members.
In addition, the Insolvency Service identified further misconduct when Burns transferred all the shares B52 Investments held in Snoozebox Holdings to connected third parties. This was despite 1.4m worth of shares already being used to secure investment of £373,000.
Burns also agreed deals with third parties for investments earmarked to purchase vehicles for re-sale. The £253,000 worth of investments, however, were transferred to connected parties and family members but due to the lack of books and records, the directors could not explain why this happened.
The missing paperwork also meant that Burns could not fully explain £5m of receipts and what had happened to £3.9m of payments.
Mark Bruce, chief investigator for the Insolvency Service, said: ‘Throughout our enquiries Neil Burns obstructed our investigations to ensure we wouldn’t be able to discover what he had done. ‘Fortunately, our investigators were able to find evidence that showed not only was he an undischarged bankrupt but that Neil Burns had used investors’ funds for his own personal benefit and those he was closely acquainted with.
‘An 11-year disqualification is a significant ban and should serve as a warning to other directors that failing to deliver up the company records will not stop the Insolvency Service carrying out a full and thorough investigation and discovering serious misconduct.’
Snoozebox Holdings went into administration in 2017. The company specialised in supplying portable hotel rooms, initially made from converted shipping containers, which can be usable within 48 hours of arriving on location.
Examples of its work include building an entire hostel out of shipping containers at the Eden Project as well as providing temporary accommodation at Glastonbury and the London Olympics in 2012.
It raised £12m through an IPO after listing on AIM in April 2012, but hit financial problems five years later after discussions with lender SQN Asset Finance Income Fund failed and it could not continue as a going concern. Snoozebox appointed Moore Stephens as administrators.
At the time, Snoozebox said: ‘The significant debt burden taken on by the company in 2014 has been one of the company's largest challenges given the poor financial and operational position of the company when the directors commenced restructuring in early 2016.
‘It is a challenge that the directors have sought to manage whilst aligning the company to a new strategy and being as transparent as possible with shareholders. However, the company has succumbed to the challenge.
‘Given the significant progress the company has made with delivery of its new strategy since mid-2016, this outcome is clearly very disappointing for shareholders.’