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Biofuel creditors’ meeting sees clash over responsibility for £36m losses

Investors in collapsed biofuel firms facing more than £36m in losses were caught between the company’s appointed administrators and the group’s founder yesterday as the two parties clashed over the best way to try to recoup investors’ money.

In March, Money Marketing reported that Southwark Crown Court had issued a freezing order on assets held by Sustainable Growth Group, Sustainable Agroenergy and Sustainable Wealth Investments after a Serious Fraud Office request.

Around 1,500 people, mostly Sipp investors, are thought to have invested in the firms that, in turn, invested in Jatropha tree plantations in South-east Asia.

Ahead of a creditors’ meeting in London yesterday, SGG chairman and founder Gregg Fryett wrote to Chantrey Vellacott joint administrators Adrian Hyde and Kevin Murphy accusing them of selling down assets rapidly rather than attempting to complete plantation projects and return investors’ money.

A letter from Hyde responding to the claims was circulated to investors at the creditors’ meeting, claiming SGG and the two other firms held no rights over land sold to investors in Cambodia, despite having paid £3m for it. The letter also said an agricultural consultancy has concluded the land being sold was “wholly unsuitable” for growing Jatropha.

During the creditors’ meeting, Fryett told the administrator: “If you had done your job properly and secured assets and put the company in a trading position nobody would lose any money.”

But Hyde said: “There are no funds to plant this land. The cash is not there. The only money coming in is from the sale of land.”

Including proxy votes, proposals were passed to allow the joint administrators to continue to realise assets and wind up the companies if there are insufficient funds to pay creditors.

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. This investment had no business reaching the public in the first place. It was speculative all along and belongs firmly in private equity and venture capital territory. They probably rejected it in the first place and I am guessing that’s why it ended up in our field !
    There is only one place these losses are heading and by the time the administrators have bled whatever cash is left once the land is sold, the losses will be even greater.
    Can’t believe an IFA would go any where near this !

  2. @ Gary,

    I wholeheartedly agree with your points. But its the age old story of IFA’s selling a UCIS, often without little or no independant due dilligence carried out to those for whom it is unlikely to be suitable, or I’m sure, where it is suitable (sophisticated for example) there has been little disclosure of risks and overall lack of understanding.

    Of course there is the bigger debacle over the line in the sand for due dilligence between the SIPP trustees and the IFA. Personally I think it falls to the IFA to do their homework.

    I’d bet a pound to a penny a FSA investigation would find illegal promotion of these to retail clients (eg no exemption used or correctly applied) and largely unsuitable sales.

    UCIS are just too ‘wacky’ and ‘opaque’ for most to ever fully understand the risks enough to confidently recommend to the average punter.

    Those who defend them to the hilt as ‘useful diversification to a portfolio’ are usually those attracted by the sparkly commission or, in my own experience, are conflicted and have some sort of vested interest.

  3. Sorry my last post was shown as anoymous and i like to flag my name for comments

  4. Sorry my last post was shown as anoymous and i like to flag my name for comments

    Nicobobinus

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