Investments  

Director banned after investors lose £8mn in care home scheme

Director banned after investors lose £8mn in care home scheme
 

A director has been banned for ten years after investors lost £8.1mn in a care home scheme in County Durham.

Sean Murray, 56, was the director of CHF 9 Limited which took money from investors, saying it would build 51 care studios in a Grade II listed building and surrounding land near Bishop Auckland.

The building was purchased in November 2017 for £350,000 and the surrounding land for £500,000 a month later.

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However, after applying for planning permission for the development, the local authority advised that the company’s plans would not be possible and suggested 10-15 studios would be more appropriate.

Despite this, Murray sought investment for the project.

The investigation by the Insolvency Service, triggered by CHF 9 going into administration in December 2019 and then into insolvency the following December, found that none of the investments were paid into the company’s bank account.

While £3.3mn was paid into the account of a connected company, a further £2.8mn was paid to the company’s solicitors.

Murray was banned from directly or indirectly being involved in the promotion, formation or management of a company without the permission of the court. 

He did not dispute that he entered into 51 contracts with investors for care studios in a Grade II listed building when he did not have planning permission.

The ban came into effect in May this year.

Chief investigator for the Insolvency Service, Robert Clarke, said: “Our enquiries found that the majority of investors would not have invested had they known that CHF 9 didn’t have planning permissions to build the care apartments.

“Sean Murray has rightfully been removed from the corporate arena for a significant amount of time. 

“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.”

sally.hickey@ft.com