Investments  

Car park investment companies enter administration

Car park investment companies enter administration

Four car parking companies, which were part of an investment scheme, have been placed into administration in an attempt to find funds to pay the investors.

Park First Freeholds, Help Me Park Gatwick, Park First Glasgow Rentals and Park First Gatwick Rentals, which were involved with the operation of car parking schemes close to Gatwick and Glasgow international airports, were yesterday (July 4) placed in administration. The car parks will continue to operate during this process.

Investments in the car parking schemes were originally sold to individuals and corporates in the UK and internationally, both directly and some through self-invested personal pensions.

But the companies failed because they did not have the funds to pay all investors who chose the buyback option offered to them, whereby they could sell back their investment following a specified number of years.

The car parking schemes were restructured in 2017-18, following intervention from the Financial Conduct Authority, which was concerned they may have been structured as collective investment schemes.

The companies weren’t FCA authorised, and as such weren’t permitted to run such schemes.

Park First agreed to stop operating and promoting the original schemes, although they did not accept that they had done anything wrong, the FCA stated.

They offered investors the choice of getting their initial investment back or to move into a new ‘lifetime leaseback’ scheme, which was restructured to avoid the legal issues identified by the FCA.

The lifetime leaseback is not a collective investment scheme and is not regulated by the FCA.  

Under the lifetime leaseback, investors are granted a long lease of their parking space to a Park First company, either Park First Glasgow Rentals Limited or Park First Gatwick Rentals Limited, depending on the location of the parking space.

These companies were to pay a fixed amount of rent (equivalent to 2 per cent of the purchase price the investor paid to buy the space).

They also issued a share to investors for each space the investor owned, potentially allowing investors to receive dividends.

Smith & Williamson directors Finbarr O’Connell, Adam Stephens, Emma Thompson and Andy McGill were appointed joint administrators of the companies.

They now intend to present proposals for company voluntary arrangements to address the financial positions of both buy-back creditors and lifetime lease scheme members, they stated.

A total £33m has already been pledged to be allocated to creditors with legally valid claims, of which the FCA believes the vast majority are the investors.

Lifetime lease scheme members will see their ongoing financial returns suspended while the terms of the CVAs are put together by the administrators.

Some of the existing funds available for the restructuring plans might be made available to these investors, and the goal is that the car parking schemes will be able to provide these returns for these members once the CVAs become active, the accountants stated.