The Signature Hotel of Cards is collapsing fast after the first card, Signature Shankly Ltd, was pulled from the structure by being put into administration by Henslow Trading Ltd. Henslow Trading Ltd is a subsidiary of one of the Blackfinch companies (we’re not going to go through all the Blackfinch companies because there are a lot). Here is our previous article on Signature Shankly.
Investors were gazumped on the morning of their hearing against Signature Shankly Ltd by an administration application made by Henslow Trading Ltd. The investors’ hearing was due to hear allegations that Signature Shankly Ltd was an unregulated collective investment scheme and that, if proven, investors would be entitled to a full refund of their investment.
We now see other Signature companies rapidly being placed into administration. Signature Living Hotel Ltd, a guarantor for many of the Signature loans, quickly followed. Read our article on Signature Living Hotel Ltd here.
This week, The Bedford Hotel Ltd, owner of The George Best Hotel in Belfast, was placed into administration by Lyell Trading Ltd, another subsidiary of Blackfinch.
Signature Victoria Mill Ltd, owner of the Signature Victoria Mill site in Manchester, was also placed into administration. See Gazette Notice here.
The Signature Hotel of Cards was built on contributions of smaller investors around the world who bought bedrooms in the hotels, gave short-term loans to the companies on high interest rates, and who purchased virtual workspaces. When you put it like that it already sounds shaky. However, the foundations appeared strong because the Hotel of Cards had the backing of some big investment institutions.
The positions of the larger institutional and corporate investors were always secured over assets, unlike the small investors who had no security. Individual room investors were always told that their security was their leases which were filed at the Land Registry. Investors in other products were told they were secured by the top company, Signature Living Hotel Ltd, but they were never told the true financial position of SLH. Now we will see how much the room leases are really worth. Historical cases involving other companies which sold hotel rooms show that the leases are never worth anywhere near what investors paid for them.
We’re still unsure of the attitude of the investment companies to the position of smaller investors. Are they going to ensure smaller investors get a fair shake or are they going to just look after themselves ?
We have more we could publish because some of the issues we have uncovered raise very serious questions. For now, investors must act because they do not want to find themselves in a situation like the Park First investors or the Northern Powerhouse Developments investors. Whenever smaller investors are facing administrators appointed by parties with an interest in protecting their own positions, smaller investors will find themselves at the very end of the queue if they are not well organised.
There are pressures that can be brought to bear on the parties involved which will improve the position of all smaller investors.
PLEASE NOTE: We use the term ‘smaller investors’ to refer to all individual investors who are not professional lending or investment institutions. This in no way reflects the level of investment made by these investors because the amounts they have invested are definitely not small. The potential loss of investment for these investors would have a huge impact on their lives.