The High Street Group
Investors who have lent money to the High Street Group of companies have been receiving letters inviting them to apply for free shares, also described in some communications as “gifted shares”. Who wouldn’t want free shares given as a gift ?
The High Street Group companies have taken out a lot of short, medium and long-term loans with investors. They offer very high interest rates well in excess of banking norms. That’s always a bit worrying. Earlier this year they stopped paying the loan interest to investors. They cited Covid-19 as an excuse which, to be fair, has affected everyone. They followed that by extending the dates for repayment of investors’ capital. They have now further extended those dates, but have sought to sweeten the pill by offering free shares as a “gift”. Of course, when you look into it in more detail this is not a gift.
Their idea of ‘free’ and ‘a gift’ is different to everyone else. Just to be sure we looked up the dictionary definition. A gift is described as “a thing given willingly to someone without payment”. But, The High Street Group does want payment. Their free gift is tied to conditions. They will give their gift only if an investor agrees to extend their loan for another three years. There is an all-out blitz on investors to get them to sign away their existing right to repayment. When a company pressurises lenders to extend their loans as quickly as possible it is normally a sign that the company is in trouble. In some of the communications we’ve seen the deal is described as follows:
“We are inviting you to become a shareholder in High Street PLC by issuing free shares. By simply completing the reservation form included, we will switch your existing capital to achieve 45% return over 3 years. You will receive the equivalent amount of capital switched as free shares in High Street Plc”. This new 3 year deal ties the investor in for the full term with no early exit option. There are a number of points to note:
1. In some cases the email includes a copy of what The High Street Group describes as “their accounts to December 2019”. They do make the point that these are unaudited accounts, however a check at Companies House confirms that this document has not been filed and the company is still 1 year and 2 months overdue with its account filing. High Street GRP Ltd is required to submit audited accounts and it is never a good sign when a company is that long overdue. It is quite often an indication that the auditors are not comfortable putting their reputation on the line by verifying that the accounts are an accurate representation of the company’s financial position. It’s a worrying sign for investors.
2. Solvent companies do not normally seek to extend debts for another three years into the future. A lot can happen in 3 years.
3. The letter we have seen is offering shares in “High Street Plc” (see the quoted paragraph above in italics). It says it in two places. There is no High Street Plc registered at Companies House or indeed on any worldwide public registry. There is High Street Group Plc, but if the letter meant to say High Street Group Plc then it is very, very sloppy for them to get their own company name wrong. Our concern is that they may not have got the name wrong and they may be intending to incorporate a new company called High Street Plc and offer shares in that entity. That will have no value whatsoever for investors. In other words, our concern is that these free shares may be a con.
4. Some of the investors who have contacted us over the past few months have already written to us to say that they will not be accepting this offer and intend to pursue their claims for repayment of their loans against the High Street Group companies.
On 11th October 2020 we sent a Pre-Action Notice to High Street GRP Ltd demanding payment of a client’s overdue debt and advising them of the client’s intention to file a winding up petition against the company in January. There is a moratorium on the filing of winding up petitions until January 2nd 2021 in cases where a defendant is likely to use Covid-19 as an excuse, hence the investor’s decision to wait until the moratorium is lifted.
The client has confirmed today that he will not be accepting The High Street Group offer and it is still his intention to file the winding up petition in January. We will be filing supporting creditor claims with the court once the initial petition has been sealed. We are also working with investors who lent their money to other companies within the Group structure and it is likely that further winding up petitions will be filed in January if their debts remain unpaid. There are at least 78 linked companies.