A company in Darlington that sold investment opportunities in renewable energy plants has been shut down after failing to pay back millions of pounds to investors.
The Business and Property Courts in Manchester heard UK Renewable Investments (UKRI) sold corporate bonds to 208 people between July 2015 and September 2016, with £2.5 million raised, with the promise of investing in the development of anaerobic digestion (AD) plants that generated green power.
The bonds had a five-year term and were to generate an interest of 11% per annum, with payments expected to be made every six months after the first year and the bonds redeemed in full after five years.
According to the Insolvency Service, the majority of the £2.5 million raised was loaned to a separate company, Bio Green Energy, to pay for the construction of 15 AD plants in Northern Ireland – each plant was to be held in a separate special purpose vehicle (SPV) company owned by Bio Green.
However, the AD facilities were never completed and all 15 SPVs have since been dissolved, with Bio Green being placed into administration in May 2017 and as a result, the company could not repay the capital and interest rates due on its loans from UKRI.
That meant UKRI was unable to meet the interest payments due to the bondholders.
Investigators found Bio Green only paid around £15,000 of loan interest to UKRI, while the latter company only made interest payments to its bondholders totalling just above £14,000.
David Hope, Chief Investigator for the Insolvency Service said: “Despite accepting millions of pounds of investments from members of the public, the company failed to exercise appropriate governance and control over how those monies were spent.
“Unfortunately, it is the investors who will suffer and this should serve as a warning that there are strict obligations companies need to adhere to when they raise money from members of the public.”