A British court has shut down renewable energy investment company UK Renewable Investments (UKRI) after it failed to pay back millions of funds to investors.
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The Business and Property Courts in Manchester, northwest England heard that UKRI sold corporate bonds between July 2015 and September 2016 to 208 people and raised £2.5m.
The firm promised the investors of investing their funds in developing anaerobic digestion (AD) plants which can generate renewable energy.
The bonds, which had a five-year term, were to generate an interest of 11% per anum, with payments expected to be made every six months after the first year. The bonds were to be redeemed in full after five years.
According to the Insolvency Service, a majority of the £2.5m raised was loaned to a separate company, Bio Green Energy, to pay for the construction of 15 AD plants in Northern Ireland but were never completed.
In May 2017, Bio Green was placed into Administration, and as a result it could not repay the capital and interest rates due to UKRI for its loan. This in turn made UKRI to fail in meeting the loan principal and interest payments due to the bondholders.
Moreover, investigators found that Bio Green paid loan interest of totaling around £15,000 to UKRI. The later firm, however, has only made interest payments of just over £14,000 to its bond holders.
The court has found that bond scheme of UKRI had failed and the firm was unable to meet its liabilities, including that owed to investors claiming the firm as insolvent.
The Insolvency Service chief investigator David Hope 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.”
Additionally, the court accepted that UKRI had traded with a lack of commercial probity. The Official Receiver has been appointed as liquidator.