Recycling fiasco

A group of companies headed by the Magna Group has been wound up in the High Court following an investigation by the Companies Investigation Branch (CIB) of the UK Insolvency Service.

The group claimed to be capable of making massive profits from the extraction of Polyvinylbutyral (PVB) from recycled glass sourced from vehicle windscreens.

But the group’s recycling plant near Selby in North Yorkshire failed to generate anything other than peripheral orders, mainly for recycled glass as a by-product. These sales totalled less than £40,000 over three years.

Prospective shareholders had been told that the group would be generating turnover in the tens of millions of pounds within two years of starting operations.

Other claims made to shareholders concerned the existence of imminent orders that never materialised, expansion plans that did not come to fruition and the value of the business, which included one valuation of £150m that proved to be totally unfounded.

In fact, the group was heavily insolvent, with estimated creditors in excess of £1.1m at the date it was wound up.

Magna failed to comply with Financial Services Authority (FSA) regulations governing the sale of investments. Due to the failure of the company to keep proper records, it was unable to provide an accurate account of how many shareholders it had.

The CIB estimated that Magna had received up to £2.3m from purchasers of preference shares, with more than 40 per cent of that sum paid over to a third-party share selling agent employed by the company.