Two companies that persuaded property investors to pay as much as £25,000 for a parking space have been wound up in the public interest by the Insolvency Service.
A court has heard that Aston Darby Group Limited and Drake Estates Property Company Limited sold car parking spaces to the general public as investment opportunities at sites close to Manchester and Glasgow airports.
However, the Insolvency Service began investigating after complaints from the public.
Investigators uncovered that Drake Estates began trading in October 2016, selling parking spaces at a site in Cheshire for £25,000. The site was close to Manchester Airport but was not owned by Drakes Estates.
Funds received were used to purchase the in the name of an offshore company acting as trustee for Drake Estates.
Aston Darby Group began trading a few months later in April 2017. It also sold car parking spaces as an agent of Drake Estates, as well as spaces at a second site in Scotland. This Scottish site was close to Glasgow Airport and again not owned by the company.
Investigators established that between October 2016 and December 2019, Drake Estates and Aston Darby Group sold circa 456 car park spaces at the Manchester site for close to £11.5 million.
While Aston Darby Group sold more than 630 car park spaces at the Glasgow site between April 2017 and December 2019 for more than £14.3 million.
The companies sold individual car park spaces to investors for £25,000 each and guaranteed an eight per cent return over the first two years for investments at Manchester, while 11 per cent returns were guaranteed to investors in Glasgow for the first two years.
Investigators, however, established that these guaranteed returns were paid to investors from the original investments rather than income generated by the car parks.
The companies made misleading claims in their sales brochures and marketing materials. Documents claimed that the sites were already generating yields of eight per cent and failed to make clear that the companies did not even own the sites when initial sales were made.
Investors were also misled into believing that planning permission had been granted for the Manchester site and that their funds would be specifically used to buy a parking space.
However, 50 per cent of their investments were used to fund commission and other charges by the companies and no development activity has been undertaken to convert the Manchester site into a ‘state of the art’ car park that investors were led to expect.
Winding up petitions were presented against both companies in June 2020 and were initially due to be heard in September: but at a hearing earlier this month, the court accepted that it was appropriate to expedite proceedings.
The court accepted that the two companies had operated with a lack of commercial probity and with a lack of transparency, as well as failing to fully cooperate with the investigation and failing to maintain and deliver financial information to the investigators.