High Street Group loses rooftop showdown with creditor, subsidiary put into administration

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A High Street Group subsidiary has been put into administration following a battle with a creditor in the High Court on 30 September. (Hat tip to an anonymous reader who pointed me to the case report.)

For clarity, I will emphasise that neither High Street Commercial Finance Limited, which issues the loans covered in my 2018 review, nor the holding company High Street Grp Limited are in administration. The company which is in administration, High Street Rooftop Holdings Limited, is another subsidiary of High Street Grp.

The story goes as follows: Strategic Advantage SPC is a company in the Cayman Islands which invests on behalf of “Korean blue-chip investors”.

Strategic Advantage employed Hypa Asset Management Limited and its two directors Simon Welsh and Marc Hounsell. Through Hypa, Strategic Advantage invested £26 million into rooftop projects run by High Street Rooftop Holdings in 2018. High Street Rooftop promised an interest rate of 16.5% in return, with the loans to be repaid in 18 months, being December 2019 and January 2020.

January came and went without High Street Rooftop paying the money back.

High Street Rooftop promised to repay according to a specified schedule and undertook to provide audited and group accounts by March 2020. Neither of these conditions were met.

(As regular readers will know, High Street Group has failed to file legally-required accounts not just for High Street Rooftop but the parent company High Street Grp and High Street Commercial Finance. The latter two companies are a whole year overdue.)

Strategic Advantage had had enough and applied to put High Street Rooftop into administration. High Street Rooftop claimed that the payment dates had been varied such that it wasn’t overdue, and the original loan agreement could no longer be enforced.

High Street Group owner Gary Forrest claimed in court that a few weeks after borrowing the money, in July 2018, “it became clear that the rooftop developments would not proceed to completion quickly enough for the Company to meet its repayment obligation due to delays in obtaining planning permission“.

High Street Group owner Gary Forrest

In Forrest’s version, he proposed to Hounsell that £20 million of Strategic Advantage’s money should be redeployed to other High Street Group projects, known as the PRS Developments, which were due to complete on various dates between October 2020 and February 2023. Forrest claimed that Hounsell agreed – and in doing so accepted that Strategic Advantage would have to wait until the projects completed for its money, voiding the original early 2020 repayment date.

In support of his version of events, Forrest cites an exchange of text messages which no longer exists.

Mr Forrest says that he believes this exchange with Mr Hounsell took place over text message but he no longer has access to his texts.

In the words of the judge, “Mr Hounsell’s account of his dealings with Mr Forrest is very different.” Hounsell denies ever agreeing to allow Strategic Advantage’s money to be moved to other HSG projects.

Among the evidence cited by Hounsell is:

  • a letter written by Forrest in July 2018 confirming the originally agreed repayment dates and containing no reference to using the money for other HSG projects with considerably longer timescales
  • an email exchange in August 2018 in which Forrest agreed to meet with a Strategic Advantage investor, to present the merits of the PRS Developments as a new project – which Hounsell submits made no sense if Strategic Advantage knew that their money had already been redeployed to PRS

High Street Rooftop argued that Forrest and Hounsell should be cross-examined and that other witnesses should be called to determine who was telling the truth. Judge Andrew Sutcliffe QC rejected this argument on the basis that HSG and Strategic Advantage had agreed that the loan agreement should only be varied in writing, and there was no evidence in writing to support High Street Rooftop’s contention that Strategic Advantage had agreed to wait longer for its money, among other more technical arguments.

The judge therefore rejected High Street Rooftop’s argument that Strategic Advantage could not enforce its loans, even though High Street Rooftop had not only failed to meet the original repayment dates but a renegotiated payment schedule and an agreement to provide audited accounts.

High Street Rooftop also argued that it should not be put into administration on the grounds that the purpose of an administration could not be fulfilled.

This argument was essentially a legalistic version of that old chestnut ‘everything will be fine as long as you don’t ask for the money back’.

[High Street Rooftop] state that the Company’s assets (namely the funding received under the [Strategic Advantage] facility) have been invested in the PRS Developments which will not realise any genuine commercial value until such time as those developments are completed. They say that the likelihood of the PRS Developments being completed on time and in a manner that achieves any realisation for the Company will be significantly impacted if an administration order is made.

High Street Rooftop stated that enforcing the loan and putting them into administration will not only prevent them seeing the PRS Developments through to completion, but impact the wider High Street Group as well.

They also say that the Company has spoken to BLME and Topland Jupiter Ltd (Topland), the secured creditors of Group companies carrying out two of the PRS Developments, namely, Olympius Developments Ltd (Olympius) and Rodus Developments Ltd (Rodus), who have indicated that if an administration order is made in respect of the Company, they will exercise their enforcement rights in respect of their security and appoint receivers over the PRS Developments managed by those companies, being Hadrian’s Tower in Newcastle and Middlewood Plaza in Salford.

The aspiring administrators, for their part, explained to the court why putting High Street Rooftop into administration should proceed.

Following the granting of an administration order, the Administrators would be in a position to investigate the ultimate destination/flow of the funds borrowed by High Street Rooftop and in turn lent to group companies. In order to maximise the position for creditors, the Administrators would seek to take steps to recover the funds from across the group on the basis these represent inter-company debtor balances.

The high-pitched sound you can hear is the squeaking of bums belonging to other High Street Group investors.

As described above, at the time of the hearing High Street Rooftop had still failed to file accounts for December 2018 or meet its promise to provide Strategic Advantage with audited group accounts.

Instead, HSG Finance Director Joanne Bell made a witness statement and provided various documents:

  • a letter from HSG’s “external accountants” Stokoe Rodger LLP (Ms Bell stated that PwC, who are supposedly compiling HSG’s long-awaited statutory accounts, could not provide anything to the court for “reasons connected with workload and Covid-19” (at least she didn’t blame Brexit)
  • draft 2019 statutory accounts and 2020 management accounts for High Street Rooftop
  • management accounts for Rodus, one of the PRS projects
  • a cashflow analysis and up to date values for the PRS developments
  • a financial forecast for High Street Rooftop

High Street Rooftop claimed that these documents showed it to be solvent and that Strategic Advantage would get its money back.

Strategic Advantage responded that

  • High Street Rooftop had failed to take into account the interest it owed
  • “The further evidence raises more questions than it answers” – specifically, by including £9.7 million of “prepayments” and causing a liability for “inter-company payables” to disappear, the 2020 balance sheet had “been inflated” from £25k to £9.8 million “without any satisfactory explanation as to how this has happened”.

The judge accepted Strategic Advantage’s first point and stated that “On the basis that very substantial interest liabilities have already accrued and will continue to accrue and it is not explained how the Company could meet this obligation to pay interest… the inevitable concusion is that High Street Rooftop is already insolvent or likely to become insolvent”.

The judge also agreed that “it is regrettable that no explanation has been provided” for the alleged balance sheet inflation, and the failure of High Street Rooftop to provide an adequate explanation “raises further questions as to the reliability of [High Street Rooftop’s] financial information”.

High Street Rooftop’s argument that it shouldn’t be put into administration because Strategic Advantage was going to get its money back eventually was therefore rejected.

Dodge this.

High Street Rooftop’s last resort was to get the onion out.

Mr Brown’s evidence is that the making of an administration order over the
Company could have a hugely detrimental impact across the Group, with the
potential loss of hundreds of jobs and the cessation of building of thousands of
new homes as well as hotels and commercial properties. […] Mr Forrest says that an insolvency event for one of the companies in the Group is likely to have wide ranging and serious implications for the rest of the Group which could be catastrophic for the individuals concerned, with some 300 full-time employees and 1,000 subcontractors being affected.

The judge confirmed he was “acutely conscious” of these potential consequences, but that they did not override Strategic Advantage’s right to enforce its debt.

In my judgment, a return to secured creditors is more likely to be achieved if licensed insolvency practitioners (rather than the existing management) are in control of the Company who can seek to ascertain full information regarding the financial position of the Company and take informed commercial decisions about safeguarding the Company’s assets and achieving a return to secured creditors.

Strategic Advantage’s application to put High Street Rooftop into administration was therefore granted.

What effect this has on the wider High Street Group, as feared by Gary Forrest, and the investors in its loan notes, remains to be seen.

105 thoughts on “High Street Group loses rooftop showdown with creditor, subsidiary put into administration

  1. Hi Brev

    Are you insinuating that HSG are going to go pop?

    If not, what is the purpose of this article if nothing but to scaremonger?

    Do you get anything from frightening people?

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  2. Are you insinuating that HSG are going to go pop?

    Nope. I have stated clearly that I have no insight into the finances of the wider HSG group, partly due to their failure to file legally-required accounts for over a year.

    Are you?

    If not, what is the purpose of this article if nothing but to scaremonger?

    To report on the outcome of a recent court case involving an unregulated investment scheme.

    Do you get anything from frightening people?

    Nope. Do you gain anything from telling people that when subsidiaries go into administration after a protracted and ultimately pointless attempt to weasel out of honoring the original repayment date on their loans, and the administrators indicate they will seek recoveries from the wider group, it’s all tickety-boo and not to worry?

    And any further stealing of other people’s names gets your posts automatically binned.

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  3. [Edited: Ok, I’ve read this comment from you enough times. Any further comments that add nothing except victim-blaming will be binned. And turn your caps lock off. -Brev]

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  4. Graham

    And you’re a wise man who never made a single mistake in his life , Mr outstanding , Brev has done his bit.

    Where are our institutions? what are they doing ? FCA, FCSC , HMRC, COMPANY HOUSE, POLICE , SERIOUS FRAUD INVESTIGATION

    Rather than landing the blame on all of us ( investors) , do you not agree that we ought to be protected by the very institutions we all pay taxes for , HSG got away with nil account return for ages ( HMRC, COMPANY HOUSE) silent,

    Corruption is the word you did not dare to list, because you damn know this what is about

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  5. The lump sum may never come whereas there may be a chance of them making a regular payment via a payment plan.

    Ask Strategic Advantage how that worked out for them (see article above).

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  6. Also attached to this email was a long awaited financial update which showed healthy P&L figures. Did anyone else receive this?

    Without having seen a copy myself, being an external party, multiple thoughts immediately spring to mind:

    1) Were these figures audited by PWC, as per the long trailed promise by HSG that audited accounts were on their way?

    2) Debt interest is a line item in the profit and loss account. Producing “healthy” profit and loss accounts while defaulting on investor debts does not compute.

    3) How did HSG manage to produce a – presumably recent – financial update for investor consumption when they are now a year and a month overdue with their legally-required accounts for December 2018? That strikes me as a failure of time management. What grounds are there for confidence in this financial update when they can’t produce legally-required audited accounts to Companies House?

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  7. On the delay in submitting returns, I was told that they can delay as long as they want as long as PWC are auditing their accounts.

    Depends what you mean by “can”.

    High Street Commercial Finance and High Street Grp have been committing a criminal offence since September 2019 when they overran the deadline to file their December 2018 accounts.

    The nine months they had between December 2018 and September 2019 should have been sufficient time to hire auditors and get them to sign off the accounts. (Not my opinion, that’s the basis on which the Companies Act was written.)

    There is no provision in the Companies Act that says you can overrun the deadline providing an accountant is in the process of auditing the accounts. You get nine months after the year end, the auditing is supposed to be over and done with before that deadline. (Six months if you’re a PLC, and the deadlines were temporarily extended by three months due to Covid – not relevant to HSG as they had already overran.)

    However, enforcement of the Companies Act is patchy to say the least and is often left up to private stakeholders.

    So if the question is “Can you legally ignore the deadline for filing accounts if you’re in the process of getting the accounts is audited”, the answer is no. There is no such provision in the Companies Act.

    If the question is “Can you get away with it” the answer appears to be yes. Companies House normally files strike-off notices against companies if they miss their filing deadlines, but has not done so against HSCF or HSGrp for whatever reason.

    Anyway, my question was less “why hasn’t HSG filed its legally-required accounts” but more “what value do its (unaudited?) supposedly healthy financial statements have when it can’t file legally-required accounts”.

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  8. Mr brambles I think your Website and facebook page are excellent. We need to organise ourselves accordingly to give ourselves the best chance of getting our money back. Still waiting for payment of my loan notes after various calls with these people

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  9. High Street Group eases fears over its future [from Clive’s article immediately above]

    That appears to be over-egging it given that all HSG has done to “ease fears” is to say that everything’s fine. Can we have a show of hands on how many High Street Group investors feel their fears have been eased?

    The journalist swallows HSG figures wholesale while failing to press HSG on why they are a year and a month overdue with their legally-required accounts. There’s only so much mileage you can get out of “PWC are working on it, something something Covid”. I was told by HSG’s own lawyers that PWC were “finalising” the accounts over two months ago.

    The assertion that High Street Rooftop only made up 2% of the business would appear to rest on HSG’s claim to have £1.2 billion of “fully funded” developments in the pipeline. In the absence of audited accounts, that is unverified.

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  10. Dear Sirs

    It is not our usual practice to comment on blogs such as this however we are concerned that people are claiming to be owed money on investments with HSG.

    We have checked all our records and cannot trace any of the following as investors

    Scott

    Mr Amin

    Russell Holmes

    David Escobar

    Ijaz

    Dooksman

    Jenos10

    Ray Palmer

    John T

    Pete

    In the circumstances if any of the posters have a genuine investment we urge you to contact us directly on Investors@thehighstreetgroup.com using reference REV/001 and we will look to resolve the matter accordingly.

    Mr Brambles, we emailed you directly at hsgcreditors@gmail.com requesting you to provide your details in order that we can identify your investment and we have yet to receive a response.

    Yours faithfully
    The High Street Group

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  11. That Gary Forrest has a wife called Hazel who was the director of the firm in the article, and there’s also a Hazel Forrest who is a 5% shareholder of High Street Grp. So if they’re not the same people it’s a remarkable coincidence.

    I’m having trouble tracking down the Companies House records for “Credit Issues” which would prove it one way or another due to their age. I’ll give it another go later when I’m not on a mobile.

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  12. It is definitely the same guy. The article refers to Forrest as aged 41 in June 2010; HSG’s Gary Forrest was born in October 1968 which matches. I tracked down the announcement of Forrest’s 2009 bankruptcy in the Gazette which uses his middle name of Ronald.

    Turns out HSG was originally a spin-off of Forrest’s sub-prime loan business. From sub-prime loans to a failed business which attempted to get consumers’ debts written off after taking upfront fees, to an unregulated property investment scheme. Quite a history.

    The High Street Group, based in Newcastle upon Tyne and founded in 2008, is a spin-off from High Street Home Loans, a specialist Mortgage Lender launched in 2003, which by 2007 was lending pounds 1billion per annum.

    It was sold to GMAC-RFC, the huge financial services arm of General Motors.

    The company was originally launched to provide Debt Management advice and Financial Mis-selling Claims to the Consumer.

    -2012 (?) High Street Group press release

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  13. The filing history of HIGH STREET FINANCIAL CLAIMS LIMITED makes for interesting reading. Some familiar names as shareholders and a big deficit for creditors.

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  14. I’ve also invested in 12 month and 7 year loan notes and have had the same experience as everyone above.

    Please let’s get together for a legal action case against HSG.

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  15. Thank you for setting up the group website. I also wish to join this group to pursue getting my investment and interest back from HSG. I believe their new offer of shares in the newly formed HSG Plc is just a trick to keep investors locked in and that these shares will prove to be worthless. The company/person that ‘introduced’ me to the HSG loan note investment is no longer get in business though. Also I see today that HS GRP Ltd Accounts for 2018 have finally been submitted to companies house and available to read.

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  16. Hmmmmm

    https://find-and-update.company-information.service.gov.uk/company/07831810/filing-history

    Even a layman without experience can work out exactly what is going to happen here!!!!!!

    Reading through the late filed accounts and reading every single word makes for very interesting reading indeed, especially the notes from the “auditors”.

    According to said document, PWC who should have originally audited the very,very late accounts “resigned” their position due to “Not completing the accounts” – Really —– We think it is plainly obvious why they resigned, all you have to do is read the accounts, it all becomes clear.

    One can see how people are taken in by all this, the excellent websites, the very good marketing across various mediums and via various brokers who incidentally will say anything to get you to sign on the dotted line, just to snatch away their commision!.

    I will bet anyone $50,000 that this sill all come crashing down, despite all the “positive” publicity, of course, i won’t be paying out the $50,000 as the pack of cards will 100% collapse.

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  17. The auditors have given an “Adverse Opinion”. That is the worst possible of the 4 types of view an auditor can take.

    They say the financial statements “do not give a true and fair view of the state of the group’s affairs”
    and they
    “have not been properly prepared in accordance with the requirements of the Companies Act 2006”

    That is as damming as it gets.

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  18. Comments on this article have been suspended. Further comments may be submitted via the “Contact” link at the top.

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