The Administrators of UKLI have posted on the UKLI home page a useful and informative summary of the situation regarding UKLI, the rights of plot owners and the options open to them.

Unfortunately, this summary is posted on the UKLI web site as an image and without alternate text and is thus not fully accessible. We have therefore decided to reproduce it as text and in full here.

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UKLI Limited (in Administration)

Lee Manning and Carlton Siddle of Deloitte & Touche LLP were appointed Joint Administrators of the of the company on 22 April 2008.

I have been appointed as administrator of UKLI Limited (the Company) together with my partner Carlton Siddle and that our joint appointment was registered with the High Court Companies Division on 22 April 2008.

The Company is in administration because it is insolvent as it is unable to meet its liabilities as and when they fall due.

The Company records show that many individuals and companies purchased land from it as part of a landbanking scheme. It appears that the operation of the scheme, for the reasons set out below, was in breach of the Financial Services and Markets Act 2000 (FSMA). Accordingly, you may have a right to make a claim against the company which you are entitled to pursue in the administration (or any other insolvency process). I explain these rights further below.

Background and Action taken by the Financial Services Authority (FSA)

The Company is also the subject of a winding-up petition served on it by the Financial Services Authority, which was advertised in the London Gazette on 17 April 2008. The FSA asserts that the Company should be wound up under the provisions of Section 367 of FSMA as the Company is unable to pay its debts and that it is "just and equitable" that it should be wound up.

The basis of the FSAs petition is that it considered that the landbanking scheme(s) operated by the Company constituted the operation of an unlawful Collective Investment Scheme (CIS). Establishing, operating or winding-up a CIS is a regulated activity under FSMA and it is necessary for any person who wishes to carry on such a regulated activity to be authorised by the FSA under the provisions of Section 19 of FSMA. The Company was not authorised by the FSA to carry on any regulated activity. The FSA also has serious concerns as to how the Company promoted its business activities to the public.

As a result of all of these matters the FSA considered it necessary to present a winding-up petition to the Court in accordance with its regulatory objectives.

You will appreciate that a central part of the Company s business was to acquire sites of land which it claimed had development potential, divide these sites into smaller plots, then sell these plots to members of the public, on the basis that the purchasers of these smaller plots would benefit from the anticipated planning permissions and the resultant effect on the value of the site as a whole.

We are now investigating the affairs of the Company to assess how creditors will be affected by the insolvency of the Company as a result of its activities. We are liaising with the FSA in order to seek to secure the best outcome for all of the creditors of the Company.

How does this affect me?

As a result of the Company not being authorised by the FSA investors do not have access to the statutory protections to which they would otherwise be entitled. Specifically, investors cannot seek compensation from the Financial Services Compensation Scheme or complain to the Financial Ombudsman Service, both of which they would have been able to do had they dealt with an authorised firm.

Although the winding-up petition has yet to be heard by the Court, the Company is now also in administration, as it is insolvent. The Company is not in a position to continue trading and therefore it will be unable to continue with its arrangements with investors, including the progressing of any development plans and planning applications in relation to the land it retains and the numerous plots it has sold to investors.

Where investors have dealt with an unauthorised firm then they may have a claim under Section 26 of FSMA. Section 26 of FSMA provides:-

26. Agreements made by unauthorised persons
    1. An agreement made by a person in the course of carrying on a regulated activity in contravention of the general prohibition is unenforceable against the other party.
    2. The other party is entitled to recover -
       1. any money or other property paid or transferred by him under the agreement, and
       2. compensation for any loss sustained by him as a result of having parted with it.

Investors will need to consider whether they wish to assert any claim against the Company. In this regard if you have already invested in land, then we would strongly advise you to seek professional advice to assist you in considering your statutory rights under FSMA (and any other relevant legislation) and whether you wish to make any claim against the Company.

What is the practical effect of this for Investors?

If it is determined (as is likely) that investors are entitled to rely on Section 26 of FSMA then they will be able to return any land purchased from the Company and seek a refund of monies paid. However, as I have explained above, the Company is insolvent and even before taking into account its potential liability to refund investors for land returned under Section 26 of FSMA, the Company appears to have insufficient realisable assets to meet its other liabilities. This means that it is highly unlikely that any customer who chooses to return land to the Company will be repaid in full.

The Company's records indicate that approximately 5000 plots of land have been sold to investors, spread over several locations. Clearly, at this stage it is impossible to determine how many investors will choose to try and exercise their rights under Section 26 of FSMA. If it is determined that investors are able to return their land to the Company pursuant to Section 26 of FSMA, where investors opt to do so, investors will have a claim against the Company for the amount the investor paid for the land (and any applicable compensation under Section 26 of FSMA) but this claim will rank as an unsecured claim against the Company.

Investors should appreciate that once land is returned to the Company, it then becomes an asset of the Company. By returning the land to the Company, the investor effectively "replaces" his ownership of the plot of land with an unsecured claim against the Company. The amount unsecured creditors may receive will depend on the value the administrators realise in selling the Company's assets and the extent of the Company's creditors.

This is why the administrators recommend that investors seek professional advice of their own, as we are unable to advise you on whether you should retain your land or return it to the Company.

What happens next?

As administrators, we are obliged to convene a meeting of creditors within 12 weeks of our appointment, to explain our proposals for dealing with the Company and its assets.

Creditors are given 14 days notice of that meeting together with a report on the progress of the administration and details of the administrators proposals. At that meeting it will also be possible to appoint a creditors committee, comprising between three and five creditors, who will be able to be regularly kept up to date by the administrator on the progress of the administration, including any investigations undertaken.

You will be sent this report and invited to the creditors meeting, which is likely to be held in late June or early July, as this will give us time to gather information on the Company s activities.

In order to gauge the level of interest from investors in attending the meeting and in potentially returning land to the Company, you will find a brief questionnaire on this site for you to complete and return to us.

In the meantime, the administrators will be liaising with the FSA regarding the winding-up proceedings that remain against the Company. It is a requirement that the administrators apply to the court for directions in circumstances such as this. We will keep you updated with regard to any developments and updates will be posted on the Companys website.

PLEASE NOTE this questionnaire is only to assist us with organising the creditors meeting and to gauge the desire of investors to return their land to the company. Any responses you give are NOT legally binding on you.

Did you pay for your plot on Credit?

You may have additional rights if you paid for your land (in full or in part) by credit card You may wish to visit the DTIs Consumer Website for further information.

You may have additional rights if you paid for your land (in full or in part) by credit card You may wish to visit the DTIs Consumer Website for further information.

http://www.consumerdirect.gov.uk/after_you_buy/money_and_credit/bought-on-credit/
(please note we are not responsible for the content on any external website)

We would request at this stage that you keep telephone enquiries to us to a minimum; however if you wish to contact us my team can be reached on +44 (0) 20 7007 1057 or by email.

For and on behalf of UKLI Limited

Lee Manning
Joint Administrator

Lee Antony Manning and Carlton Siddle were appointed joint administrators of UKLI Limited on 22 April 2008 and the affairs, business and property of the company are being managed by them. The Joint Administrators contract as agents of the company without personal liability.

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