Dozens of investors have contacted a London law firm about the possibility of taking legal action after several Carlauren Group companies went into administration and an investigation was started into what happened to £76million.
Penningtons Manches Cooper LLP is already acting for more than a dozen investors and said about 50 have made inquiries. The investors are looking at suing other law firms after taking advice on whether to purchase long-term leases in Carlauren-owned care homes or hotels with on-call care.
Solicitor David O’Brien said the group action for professional negligence would hinge on whether investors were given enough information by their lawyers on the potential risks of putting cash into schemes which promised high returns but where there was also the possibility cash would be lost.
“We have had about 50 people contact us and are acting for 14,” said Mr O’Brien. “But the number is growing. They are principally foreign, from all over the world.”
In November 2019 an investigation started into the disappearance of more than £76million of investors’ cash at a number of Carlauren Group firms.
After a three-day hearing in London’s High Court, before ICC Judge Prentis, Carl Jackson, managing partner at business advisory firm Quantuma, and Philip Duffy, of Duff and Phelps, were appointed as joint administrator over a number of the Carlauren Group of companies to uncover how funds that were originally paid into the group ended up being used.
Holding companies Carlauren Group Ltd and Casarian Holdings Ltd (formerly known as Carlauren International Holdings Ltd) and four other companies went into administration, and have now been joined by Carlauren Travel Ltd.
Another firm, CHF 3 Ltd, which owned The Auckland House Hotel on the Isle of Wight, was liquidated in September.
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Somerset-based Carlauren, which employs 260 people, bought 25 properties across the 海角视频, including Windlestone Hall, near Bishop Auckland, County Durham, which it acquired for £850,000 in 2017.
The purchases were funded by selling individual rooms in those properties to investors for about £100,000 a time, but most of those homes never opened.
Among other Carlauren properties were The Headway hotel, renamed The Woodhouse. In Morecambe, and Lambert Manor, in Grange.
Investors into Carlauren schemes were told their money would pay for the purchase of long-term leases in the care homes or hotels with on call care.
Some 777 rooms have been purchased by the group in various properties since 2016, many of which did not have planning permission for the use proposed at the time.
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By July 2019, all of the firm’s care homes had closed, with the group running commercial hotels and other non-care companies.
Running alongside the administrators’ probe is that of Penningtons Manches Cooper LLP, and at least one other law firm.
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Mr O’Brien, a partner at Penningtons Manches Cooper, suspects more investors will come forward, those that have contacted him account for about 350 rooms.
He said “fractional ownership schemes”, of the sought used by Carlauren, typically involve a firm buying the freehold of a building, such as a hotel or care home, and converting rooms, selling the leases to investors, and letting them out to provide a return.
Mr O’Brien said this type of investment model has grown significantly since the Credit Crunch and Banking Crisis.
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“Developers couldn’t get funding in the conventional ways,” he said. “Investors put cash in, but they are inherently risky and do go wrong.
“Most operate a 10% yield, which does sound too good to be true.”
A Carlauren company, Heritage Hotels Ltd, which is not in administration, owns Langdon Court Hotel, on the edge of Plymouth.