Category: Signature Capital

Signature Capital administrators release update

~ Phoenix ~ 11 Comments

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.

Total losses expected for unsecured Signature investors

~ Phoenix ~ 9 Comments

The administrators of Signature Living Hotel, the parent company of the Signature Capital investment scheme, have released their initial report.

How much the company owes to investors is difficult to pin down. Signature Capital consists of a dizzying web of 106 currently active companies controlled by Lawrence Kenwright. Although it was these subsidiaries that borrowed money from investors, a guarantee was typically given by Signature Living Hotel Ltd as the parent company.

As covered in May, Signature made an unsuccessful attempt to wriggle out of this guarantee in the High Court, a few months before going into administration. In that case the investor had loaned money to Signature Heritage (Belfast) Limited with a guarantee by Signature Living Hotel.

The administrators have totted up a total of £111 million in liabilities, the majority of which is debt owed to intercompany and related parties. It includes a £10 million provision for liabilities to retail investors, but the administrators expect “the final figure will be much higher”.

In addition to soliciting investment from retail investors, Signature borrowed money from a host of bridging lenders and other commercial lenders, secured on its freehold properties.

Even a homeless shelter opened by Signature to great fanfare, including a half-hour video documentary produced by the Grauniad, was mortgaged – to bridging lender Stoneygate. The homeless charity has found alternative premises and is said to be vacating the Signature property shortly.

The administrators say that after paying off the secured creditors,

it is anticipated that there will not be sufficient realisations to enable a dividend to unsecured creditors… however this remains uncertain

The collapse of the Signature empire probably puts the kibosh on Lawrence Kenright’s ambitions to be Mayor of Liverpool, though given the current state of UK politics, who knows.

I reviewed Signature Capital’s investments in May 2019, noting that despite claims on their website to provide “fantastic returns in a secure environment” and “a safe place [for money]”, their investments paying up to 16% per year were inherently high risk.

Despite the factual nature of my review, Signature Capital spent investors’ money on paying the law firm DWF to threaten me with a defamation claim in the weeks after I published my review. Hilariously, their complaint included an attempt to claim that Signature did not offer investments paying 16% per year, despite this coming from Signature’s own marketing material.

They claimed that my review was misleading as I had failed to regurgitate Signature Capital marketing spiel about their investments being guaranteed by Signature Living Hotel (the same Signature Living Hotel that is now in administration). According to Signature’s lawyers, I had “failed to understand or explain the nature of the guarantee”. As Signature Living Hotel is now in administration, I think we can now take it as read that I did.

Only a few days after my review was published, and while their lawyers were fruitlessly SLAPPing at me, the BBC first reported on Signature Capital’s problems with repaying investors.

Signature Capital’s problems appear to have started before then, however. On February 2019 the website signaturecapital-scam.co.uk was registered, which made various allegations against Signature Capital.

In May 2019 Signature Capital took over the signaturecapital-scam.co.uk domain, and replaced it with a website which directed investors to “Avoid Being Scammed and Invest With Signature Capital”. Subsequently the website was blanked. How Signature acquired the domain from the original aggrieved owners, e.g.  by paying them off or using legal proceedings, is not known.

Signature Capital’s repurposing of the signaturecapital-scam.co.uk domain was not their only financial promotion to investors. Both Signature Capital’s own website and owner Lawrence Kenright’s personal blog promoted Signature’s investments.

Let’s see how we compare to other investment opportunities in the UK…

Signature Investments – 11% or 8% ROI

Current accounts – 3-5%

Property – 3-6%

Retail bonds – 5-7%

[…]

As you can see from the investment table above, Signature Investments can provide an excellent return on your investment. You only have to review our proven track record to realise you can embark on a rewarding investment with a successful, passionate hospitality company.

Neither Signature Capital nor Lawrence Kenwright are authorised by the Financial Conduct Authority. Distributing financial promotions without authorisation in the UK is a criminal offence punishable by a prison sentence and a fine.

Despite issuing financial promotions to the public via the Internet for years, resulting in what seems certain to be at least tens of millions of losses, no action has been taken by the FCA against Signature Capital that is in the public domain.

Addendum

Signature’s hotel and restaurant business appears to be partially insulated so far from the collapse of the Signature Capital investment scheme. The Liverpool Echo reports that several Signature venues are preparing to reopen after being closed due to lockdown.

Despite these problems, a number of the group’s most popular venues – including the Shankly Hotel and Alma de Cuba bar in Liverpool – are preparing to open, with administrators Duff and Phelps confirming in an update that the trading operation of these venues does not fall under the scope of the administration.

Kenwright stated “while certain parts of the group may be in administration, Signature Living will continue to operate” and “it is worth noting that the value of our overall ‘bricks and mortar’ assets significantly outweighed our liabilities pre Covid”. How much it is worth is open to question given that Signature’s failure to pay investors on time began in early 2019, when Covid was a twinkle in a pangolin’s eye.

Administrators appointed to Signature Capital

~ Phoenix ~ 7 Comments

According to the Gazette, the parent company of Signature Capital, Signature Living Hotel Limited, has been put into administration.

Duff and Phelps were appointed as administrators. Other collapsed unregulated investment schemes currently administered by Duff and Phelps include Blackmore Bonds and Carlauren.

Signature’s problems paying investors have been well documented over the last year.

In January this year Signature Living Hotel took two investors to court in attempt to prevent them serving winding up petitions on the company. Both investors loaned money to Signature Heritage (Belfast) Limited, with a guarantee given by the parent company Signature Living Hotel.

Signature argued that the guarantee – a guarantee that Signature had made much of in its investment literature – was invalid, because it hadn’t been witnessed, despite it being signed by sole director Lawrence Kenright.

The judge “had no hesitation” in throwing out this argument and allowing the investors to proceed with their winding up petitions.

I reviewed Signature’s investments in May 2019. I pointed out that, despite Signature’s claims on its website to offer “a safe place [for money]” and “fantastic returns in a secure environment”, its investments offering rates of up to 16% per year were inherently high risk.

A couple of weeks after I posted my review, Signature’s lawyers took umbrage with this entirely factual description, and threatened to sue me for defamation.

You state that it is “misleading” for our client to promote its product as “safe” and “secure”. The quote you refer to was however given by a third party investor [Brev: this is irrelevant as Signature chose to use that testimonial in its marketing, and remains responsible for its own marketing] and our client maintains that the nature of the guarantee given to investors by Signature Living Hotel Limited gives significant comfort to their investors.

Your article wholly fails to explain that the loans are guaranteed by Signature Living Hotel Limited, a company that you do note has significant assets. Your failure to appreciate this may have clouded your judgment in relation to the investment generally.

So let’s recap: Signature paid money (actual investors’ money) to get their lawyers to threaten me with a lawsuit. On the grounds it was defamatory (it wasn’t) to describe their investments as inherently high risk (they were), because I hadn’t understood their super-duper corporate guarantee (I had).

Less than a year later, Signature attempted to argue that this guarantee they threatened to sue me over didn’t actually exist (for two investors), on the basis that director Lawrence Kenright’s signature hadn’t been witnessed.

Just another year in the life of an unregulated investment scheme.

Signature’s attempt to wriggle out of the guarantee failed because, as the judge ruled, both parties clearly intended for this guarantee to form part of the loan contract, therefore it didn’t matter that they forgot this formality.

As Signature didn’t attempt to argue that the guarantee wasn’t supposed to exist, its argument was one level above “it doesn’t count because we had our fingers crossed”.

Signature Living Hotel has previously survived two winding up petitions, which were dismissed in September 2019 and March 2020. With that in mind, I’m saving Signature’s full obituary for when more details of the administration emerge, so more details as and when they appear on the public record.

 

Signature Living continues to struggle with repayments, libels owner’s own brother, reports him for fraud

~ Phoenix ~ 3 Comments

[Note: due to a previous legal objection, the logo above is an original representation of Signature Capital’s logo, and not its own.]

Unregulated hotel investment scheme Signature continues to struggle with repayments to investors, and has been the subject of a series of news articles from outlets including the BBC and the Liverpool Echo in recent weeks.

Six months ago in May the BBC first covered Signature’s late payments to investors.

Two weeks ago the BBC reported on international investors flying into the UK in attempt to chase their money.

Ms Grampe said she invested in the company’s football-themed George Best Hotel in Belfast and the money was meant to help pay for the care of her elderly parents.

The BBC has seen a document, signed by a senior Signature executive, appearing to confirm the amount owed and promising to repay her over six weekly payments, starting on 6 November.

To date, Ms Grampe said these payments had not been made.

Signature advertised its investments, which claimed returns of up to 16% per year, as “fantastic returns in a secure environment” and “a safe place”.

The Liverpool Echo is also regularly covering the attempts of investors to get their money out.

Earlier this week, an investor told the ECHO how Signature Living’s failure to pay her back made her dying mother’s final months of life tremendously difficult, with others also demanding they get the money they’re owed.

An Ireland-based investor is another to speak out today, telling the ECHO he cannot sleep at night for fears over his £300,000 of investments in Signature schemes.

Speaking about the impact the situation with Signature Living is having on him, he said: “I haven’t slept for the past three nights.

“I can’t tell my wife about this – she wants to book a holiday but we can’t while I don’t know what is happening with my money and I can’t tell her why.

According to The Caterer, Signature is to sell or refinance (i.e. borrow more money against) its properties.

Signature has told the BBC that investor payments have been delayed because “any bit of spare money that the company has goes on the building sites”. It also said that they are “financially robust and we have a strong track record of returning funds to our investors. Any suggestion otherwise is entirely wrong.” It blamed Brexit for a slowdown in sales and funding.

Signature’s bad publicity took a bizarre turn when the firm libelled Signature owner Lawrence Kenright’s own brother, Graham, in response to criticism.

Graham Kenwright said he and his brother Lawrence had fallen out in the past but reconciled during 2014-15, when he worked for Signature Living on the refurbishment of two of its Liverpool hotels.

“I wouldn’t have invested in one of Lawrence’s businesses,” he said during the interview.

Graham Kenwright also made a number of specific criticisms of the company, which have been explicitly denied.

The allegations against Graham Kenwright, marked “Private and Confidential” were sent to the BBC after a spokesman for Signature initially claimed he had been reported to the police for stalking.

Merseyside Police said it had no record of any such alleged offence and the spokesman subsequently said this was “my mistake”.

The letter, sent by Signature’s lawyers, instead alleged Graham Kenwright harassed his brother’s family, although it provided no contemporaneous evidence of this.

It also said he had been reported to the police for alleged fraud.

Merseyside Police subsequently confirmed this report was made during the afternoon on which the letter was sent.

It will be interesting to say where the allegation of fraud against Graham Kenwright (who presumably denies any wrongdoing) goes.

Making an allegation of fraud to the police purely so you can tell a journalist that they’ve been accused of fraud on the same afternoon seems like the definition of wasting police time. Unless of course there actually is a case for Kenwright 1 to answer.

At a TedX event in July (a franchised offshoot of the popular speaking events where commentators talk about a diverse range of topics in identical monotonous oratory) Kenright spoke eloquently about his business problems in 2009.

I didn’t understand the property market at the time but I thought that’s just what you do.

One day I got a call from a liquidator. He said your bank had been on the phone, they’ve got a couple of questions they want me to ask you.

Everything was fine until I got to the front door to the development site that I had where I had invested all of my money, every single last penny, and I tried the key in the door and it wouldn’t fit. I tried it sideways, I tried it upside down, I even put it away and try the new set of keys that I knew it wouldn’t be but I tried them as well.

…I stood there for another five or ten minutes trying to reason with the door to let me in and if some way they let me in maybe my issues would all be over. Ultimately I turned away and I walked home. Halfway home I was realising that the personal guarantee that I gave the bank actually was joint and several, and the guarantee spread across the two, so I was going to lose that property, I was going to lose my home as well.

So I did what all developers doing at the time of the world crash: I went to bed, I stayed there for three days, and a bailiff come to the door and said “Mr. Kenwright, we’re going to take away your property today” and I used all of my Scouse guile to ensure that I stayed and thankfully I did. And then I went back to bed.

I went to bed for three whole months until one day I got a phone call from my daughter – my daughter went to private school – and she was 14 years of age luckily for me she had an extremely intelligent headteacher who pulled her out of class said to her “you tell your father why we are throwing you out of school today”. My daughter came on the phone and screamed as loud as she could “you’re lying” “you’re the chief” “how could you do it to me at a pivotal time in my life” “how dare you do that to me” – the sort of words you never want to hear as a father.

I bolted upright, I phoned up my best friend, I said whatever you have, please can you lend me it, give me anything, anything. He gave me an amount of money, I ran to the school, I paid the school fees and my daughter finished her school, got a degree and finally started speaking to me again. I was wrong, she was right.

But what I aligned with that was the sweet and the bitter. I used that bitter to galvanize me into who I am today. Understanding what it takes to run through walls. Using my daughter’s high-pitched tone to go into my mind’s eye to use as a tool every time I need it. And that’s exactly what I did.

Ten years on I ended up with a whole array of hotels, businesses, and I don’t know how I got there. All I know is I kept my head down and I was galvanised and I pushed through.

Signature Living claims assets worth £261m in a brochure recently sent to investors.

We review Signature Capital’s investments offering up to 16% per year

~ Phoenix ~ 21 Comments

[Note: due to a copyright claim, the logo above is an original approximation of Signature Capital’s logo, and not its own.]

Signature Capital offers a range of unregulated property investments.

As at March 2019, these investments included an investment in the Dixie Dean Hotel paying 12% over 12 months, and an investment in The Signature Flotel paying 12% over 12 months (with a higher minimum investment).

I have seen an email detailing a further investment in the Martins Bank project paying 10% per year for investments between £15k and £45k, rising to 16% per year for investments of over £250,000.

Signature Capital frequently changes the individual properties on which its investments are based. However the interest rates above are typical of their offerings, based on previous offerings which are now “sold out”.

Who are Signature Capital?

lawrencekenright
Signature Capital CEO Lawrence Kenright (note: due to a copyright claim, the subject’s photo has been replaced with an artist’s impression)

Signature Capital is headed by Lawrence Kenright, who is director of 56 active UK companies at time of writing. The “top company” is described as Signature Living Hotel.

Signature Living Hotel is currently a month overdue with its Companies House accounts, as are a total of 20 other Signature Capital companies at time of writing.

The March 2017 accounts of Signature Living Hotel (which are now two years old) show net liabilities of £11 million on total assets of £74 million.

Up to date accounts are essential for due diligence. Anyone considering investing will need up to date audited accounts for Signature Capital (or the specific company borrowing money from them) – just as a starting point.

How safe is the investment?

Signature Capital promotes itself via a testimonial from Hong Kong rugby player who Tyler Spitz who describes the investment as “fantastic returns in a secure environment” and “a safe place”.

I’m getting fantastic returns in a secure environment. It didn’t take me long to realise my money is in a safe place and that I was going to get great returns on my investment.

-Tyler Spitz

[Marketing material published on Signature’s website as at the publication date of this article. Emphasis as per original.]

This is a misleading description of Signature Capital’s investments which are inherently a very high risk investment, being a loan to an unlisted company bearing rates in the region of 10% per year.

The fact that Signature Capital offers a fixed return to investors means these investments are in Signature Capital itself, not just in property.

Loans secured against property are not risk-free as there is a risk that if the underlying borrower defaults, the security cannot be sold for enough to cover the loan.

Investors in asset-backed loans have been known to lose 100% of their money when it turned out that there were not enough assets left to pay investors after paying the insolvency administrator (who always stands first in the queue).

We are not in any sense implying that the same will happen to investors in Signature Capital only illustrating the risk that is inherent in any loan note even when it is a secured loan.

If investors wish to mitigate this risk, it is essential that they hire professional due diligence specialists (working for themselves, not Signature Capital) to confirm that in the event of a default, the assets of Signature Capital – or the specific company borrowing money from them – would be valuable and liquid enough to compensate all investors. Investors should not simply rely on what Signature Capital tells them about their assets.

Signature Capital’s literature is big on financially irrelevant statistics like the occupancy rate of its hotels or the square metrage of its assets. The occupancy rate of a hotel, by itself, tells you nothing about how profitable the business is and by extension how likely it is to be able to pay up to 16% per year to lenders.

Should I invest in Signature Capital?

This blog does not give financial advice. The following are statements of publicly available facts or widely accepted investment principles, not a personalised recommendation. Investors should consult a regulated independent financial adviser if they are in any doubt.

As with any individual loan note to an unlisted company, this investment is only suitable for sophisticated and/or high net worth investors who have a substantial existing portfolio and are prepared to risk up to 100% loss of their money.

Any investment offering returns of up to 16% is inherently extremely high risk. As an individual, illiquid security with a risk of total and permanent loss, Signature Capital’s loan notes are much higher risk than a mainstream diversified stockmarket fund.

Before investing investors should ask themselves:

  • How would I feel if the investment defaulted and I lost 100% of my money?
  • Do I have a sufficiently large portfolio that the loss of 100% of my investment would not damage me financially?
  • Have I conducted due diligence to ensure the asset-backed security can be relied on?

The investment may be suitable for high net worth and sophisticated investors who will already be well aware of all of the above risks, are looking to invest a small part of their assets in corporate lending, have done sufficient due diligence, and feel that the return on offer is sufficient for the risks involved in lending to a small company.

If you are looking for a “safe” or “secure” investment, you should not invest in corporate loans with a risk of 100% loss.