The administrators of Signature Living Hotel (the parent company of Signature Capital) have released their latest update.
Much of the report is devoted to an update on the running of Signature Living’s hotel properties and the sale of assets, but the expected outcome for retail investors and all other unsecured creditors of the company remains total losses.
Based on current information it is anticipated that there will not be sufficient realisations to enable a dividend to unsecured creditors. […] This position may change dependent on future realisations, quantum of claims from secured and preferential creditors and the costs of the Administration.
Retail investors initially loaned money to other Signature Capital entities, which fall outside the scope of the administration, but with a guarantee provided by Signature Living Hotel, which is the company in administration. The administrators advise retail investors to seek repayment from the Signature entity their contract is with in the first instance.
The administrators reveal that an attempt was made to transfer all the assets of Signature Living Hotel and its subsidiary companies to a new legal entity. This has now been reversed following legal and tax advice. When this was done is not stated, but it must have been between January 2020 (when Signature Living Hotel filed a confirmation statement declaring no change of ownership) and April 2020 (when the company collapsed into administration).
As part of the initial review it was found that the shares in both the Company and all the subsidiary companies had been transferred to a new legal entity that had been set up by the Director to replace the Company as the ultimate parent of the wider Group.
After discussions with the Director, and following legal and tax advice, these transfers were reversed, and the Company has resumed its role as the ultimate shareholder of the majority of the entities in the wider Signature group.
The rationale behind the aborted transfer of the group’s assets is not revealed by the administrators.
When totting up Signature Living Hotel’s unsecured creditors, the administrators originally included a £10 million contingency for claims by retail investors on Signature Living Hotel’s corporate guarantee. So far, claims of more than double this (£20 million) have been received from retail investors.
The administrators note that a group of retail investors is in discussions with Signature owner Lawrence Kenwright in an attempt to formulate a restructuring plan. The administrators comment that they have received no details as yet and cannot comment on the viability of any such plan.
Signature continues to secure positive coverage for itself in the trade press despite losing tens of millions worth of investors’ money. A recent article in Boutique Hotelier claimed that the opening of a new hotel in the Signature Group, Rainhill Hall, represented “a bid to transform its fortunes after a difficult year”. Signature owner Lawrence Kenright claims “it’s an exciting time for Signature Living”.
While the article waxes lyrical about Signature’s “Grade-II listed country house following a renovation project that has seen 14 new bedrooms installed, plus a new spa and a handful of ‘fairytale’ treehouses built in its 18 acres of grounds”, it seems unlikely that a hotel in St Helens is going to change the picture for Signature Living’s investors. Rainhill Hall is not subject to the Signature Living Hotel administration.
Despite Signature having promoted its investments directly to investors without FCA authorisation via emails and its website, which claimed that its high-risk unregulated loans represented “a fantastic return in a secure environment”, no action has been taken by the Financial Conduct Authority against the Signature scheme that is in the public domain.
The administrators’ costs currently stand at £446,000 plus £14,000 of expenses.