Administrators of collapsed property company High Street Group say they are investigating largescale movement of funds between different companies in the group.
The Newcastle-based group - the firm behind the city’s Hadrian’s Tower - was placed into administration in August 2021 year after suffering financial struggles before and during the pandemic.
Before its failure, High Street Group had been involved in several high-profile developments around the region, including plans for a mixed use scheme near St James’ Park as well as a project to build apartment on the former Brett Oils site on the banks of the Tyne in Gateshead, and a number of schemes in Birmingham and the North West.
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A catalogue of cash flow issues led to a subsidiary being placed into administration in 2019 after failing to repay an overseas lender, while its accounts were delayed on a number of occasions and two separate auditors resigned. It said the loss of institutional funding for many of its schemes during the pandemic had caused its eventual failure.
Now a newly published administrators’ report, covering the six-month period from December 16 2022 to June 15 2023, highlights how administrators are exploring the movement of funds in the company’s bank account from 2018 onwards.
It says: “One area of focus is the investigation into the movement of funds in the company’s bank account. The analysis relates to transactions from 2018 onwards. The initial work identified 12,300 individual transactions that have warranted further investigation and we are now in the process of examining and investigating these. This is a significant amount and whilst it will take further time, we are conscious that creditors and loan note holders would like an explanation as to where the money has gone or what it was used for.
“In order to further this investigation, we continue to make enquiries of the directors and insolvency office holders of all relevant companies requesting additional information and an explanation as to what the money was used for or why it was provided.
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“As a brief overview, for the period 2018 onwards, we have identified in excess of 2,300 transactions over £50,000 that require further investigation amounting to £314m. There are in excess of 4,700 inter-company withdrawals totalling £96m together with 2,300 inter-company receipts of £72m.
“There are other receipts and payments that at present are not clearly labelled and will require further scrutiny.
“Due to the sensitive nature of our investigations, we have decided not to publish specific detail with regard to our findings, as this could hamper any action or further investigations that may be required. We are certain creditors will understand the stance we have adopted. As and when we are able to provide creditors with a fuller explanation of our investigations, they will be detailed in a subsequent progress report.”
Meanwhile, the report says that scammers are continuing to target creditors, claiming they can help recoup money they are owed.
Loan note holders - secured investor creditors - total £123,602,050 according to the records of the company, and to date the administrators have received claims amounting to £110,554,837.09.
The report says: “There are still numerous scams being targeted against loan note holders. They claim, for an upfront fee, to be able to pay the loan note holders their funds. This is not true and you should not engage with these people. The most recent scam is solicitors purporting to act for Hadrian’s Real Estate.
“No funds should be paid to these individuals in relation to their loan notes. The scammers have been known to contact loan note holders by email and telephone and appear to be very convincing. The company is not in liquidation and anyone claiming to have been appointed to return funds to creditors is committing fraud.”
The report also reiterates that any dividend payment will be subject to the recovery of assets and costs and: “Due to the lack of realisations to date, we cannot comment on the quantum or timing of any dividend at this time”.