Liquidated business “pocketed millions” in investor cash

Blog Insolvency

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A company placed into compulsory liquidation has been found guilty of allowing the business to operate with “a lack of commercial probity”.

GFI, which promoted teak investment schemes in Brazil, was wound up in 2014 owing more than £2.1 million to creditors.

The Insolvency Service, conducting the investigation, found that GFI received around £20 million from the sale of plots in the Belem Sky Project and a little under £4 million from plots sold in the Para Sky Project,

However, there was no evidence to suggest that many of the investors in the Belem Sky project received any returns after the first year, with just £709,884.69 leaving the company to certain individuals.

There was also no evidence in the company records or information provided by third parties of any returns being made to investors in the Para Sky Project.

It emerged that more than £13 million had been paid into bank accounts controlled by GFI’s company directors.

The two directors told the Insolvency Service that the capital was being used to operate the business whilst the company had no bank account, but it was revealed that just over £8.8 million had been used to pay creditors of a Dubai based company controlled by the same directors. This company was wound up by the High Court in October 2014.

Both directors were banned from acting as a company director for a period of 10 years.

Anthony Hannon, Official Receiver for the Insolvency Service, said: “Directors who receive investment monies and misapply them for purposes not to the benefit of the company can expect to face the consequences of a lengthy period of disqualification.”