3 Directors banned for 7 years each after £4 Million loss in Derby student accommodation development
Three directors, Fraser MacDonald, Gavin Barry, and Edward Fowkes, have been disqualified for seven years each, following an Insolvency Service investigation, after misleading 42 investors in a Derby student accommodation project, leading to over £4 million in losses. Our Director Disqualification solicitors comment.
Background to this Director Disqualification case: The Croft Development
Fraser MacDonald was a director of Prosperity Cathedral View Development Ltd and its associated fundraising entity, Prosperity Cathedral View NMPI Ltd. The companies raised £4.13 million from 42 investors, promising their funds would be used exclusively for The Croft development for student accommodation in Derby. However, over £2 million was redirected to a connected company and not used for the development.
The companies entered administration in 2020, leaving investors with a lower repayment priority than initially stated. Prosperity Cathedral View Development Ltd had significant loan agreements, leading to higher-priority repayments to commercial lenders and leaving no funds for the 42 investors when the project was sold in 2021.
The administration triggered the investigation by the Insolvency Service.
Consequences and Director Disqualification
MacDonald, Barry, and Fowkes have been disqualified from serving as company directors until 2032. Ann Oliver, Chief Investigator at the Insolvency Service, highlighted their failure to safeguard investors’ funds and misleading promotional practices, and said:
“Significant sums of money were invested by people who thought they had more security over their investments than they actually did.
We also uncovered evidence that the three directors did not use all the funds borrowed for financing the development at The Croft development as they had promised.”
Key Points in this case
– Misleading Investment Offers: 42 investors were misled about the security and use of their funds.
– Significant Financial Losses: Over £4 million lost due to mismanagement and redirection of funds.
– Director Disqualifications: MacDonald, Barry, and Fowkes disqualified for seven years each.
Our Perspective on these Director Disqualifications
Our view is that based upon the facts as described, there probably could not have been any other outcome to this case.
Each case turns, however, on its own facts. It is vitally important to remember that in circumstances where the Secretary of State/Insolvency Service (SoS/IS) is a stranger to the detail of what went on in the Company and also with the experiences of the Directors who lived the story, the Directors must tell their full story in a structured, positive way to the SoS/IS. We can help – this is what we do.
Doing so may well:
- Result in a Director Disqualification investigation (DDI) being abandoned, thus avoiding Director Disqualification proceedings (DDP) being commenced. (Yes, the SOS/IS do abandon DDIs.)
- If the DDI results, however, in the threat of DDPs, taking legal advice early can result in the SOS accepting a lower period of disqualification than was originally sought.
- Avoid a referral for a Criminal law investigation against the Director.
- Allow for /pave the way for a successful application by the Director to the Court, for Permission to continue as a Director of one or more nominated, identified companies despite disqualification (Section 17 CDDA 1986).
Our team of Director Disqualification solicitors has a strong and enviable track record of persuading the Insolvency Service to drop their disqualification investigations into directors of failed companies. If you’re in need of expert Director Disqualification advice, take a look at some of our testimonials to see how we’ve successfully helped other directors.
For more information on director disqualifications and how we can help when being investigated by the Insolvency Service, contact us or call us on 0121 200 7040 for a free of charge initial conversation.
