Christianson Property Capital group subject to yet another strike-off

Less than two weeks after Christianson Property Capital Limited belatedly filed its accounts, causing the strike-off action against it to be suspended, its subsidiary Victory House Group Limited has now also been given notice of compulsory strike-off, due to its continued failure to file accounts with Companies House. The accounts have been overdue since 28 February 2018.

According to the last confirmation statements filed with Companies House, Christianson Property Capital Limited is the 100% owner of Victory House Group Limited, which in turn owns 100% of Victory House No 1 Limited, as well as two other companies (Victory House No 2 and No 3) which are currently dormant.

If Victory House Limited continues to fail to file accounts, and no objection is received to the strike-off, Victory House Limited will be removed from the register and all its assets – which includes Victory House No 1 Limited – will be forfeited to the Government.

Victory House No 1 Limited, according to its last accounts, holds fixed assets of £800k and current assets of £2.4 million. Little further information is available as all the Christianson Property companies are exempt from providing full accounts or auditing due to their small size.

This means that all three non-dormant Christianson Property companies have now been subject to compulsory strike-off notices this year. The previous strike-off notices against the parent company Christianson Property Capital and the subsidiary Victory House No 1 have now been discontinued, after accounts were finally submitted.

Why Christianson Property Capital seems to be incapable of filing accounts on time is not known.

Update 9.5.18: Victory House Limited has now filed micro-entity accounts (which show very little other than £500k in fixed assets) three months overdue, and the strike-off will almost certainly be discontinued shortly.

Christianson Property Capital files April 2017 accounts, reports minus 4.7 million in net assets

Christianson Property Capital Limited has finally filed its April 2017 accounts (3 months overdue), resulting in the strike-off action against it being suspended.

The accounts are micro-entity accounts and are therefore exempt from auditing and from filing a profit and loss account, meaning there is very limited information that can be drawn from them.

Nonetheless, a few facts can be gleaned from the accounts:

  • Current assets as at April 2016 have been significantly revised compared to Christianson’s previously filed accounts. The April 2016 accounts stated that the company’s current assets at that date were £6.9 million, consisting almost entirely of amounts owed by group undertakings. The April 2017 accounts however have changed this figure to £4.3 million, a significant write down. This in turn meant that 2016 net assets have been revised from minus £1.1 million to minus £3.2 million.
  • Why the April 2016 figure needed to be revised is not known, nor is Christianson Property Capital obliged to provide any explanation, given its micro-entity status.
  • Current assets as at April 2017 “increased” from the revised figure of £4.3 million in 2016 to £5.3 million in 2017. (Although when I describe this as an increase, it feels a bit like The Ministry of Truth announcing that the chocolate ration has been increased from 10 grammes to 20 grammes, when it was 30 grammes last month. It is still a decrease compared to the figure reported in the 2016 accounts.)
  • Net assets however decreased from minus £3.2 million to minus £4.7 million. The increase in the value of current assets was more than cancelled out by an increase in creditors due after more than one year, which rose from £8 million in April 2016 to £10.5 million in April 2017. This £10.5 million is likely to predominantly represent investors in Christianson’s 10 year bonds.

(H/T to commenter Stephen for spotting the discrepancy between the 2016 and 2017 accounts in regard to April 2016 current assets.)

The first big test of Christianson Property Capital’s solvency will arise in 2019, when their earliest investors have the right to withdraw 50% of their investment after 5 years, subject to an unspecified exit fee.

Notice filed to strike off Christianson Property Capital

Christianson Property Capital was founded in 2014 and offers unregulated bonds paying 10% per annum for ten years. (Or previously offered; it is unclear whether the company is accepting new investment.)

The company has been overdue with its accounts to Companies House since January 2018.

As a result of Christianson’s continued failure to file accounts as legally required, Companies House filed a notice to strike the company off the register on 3 April 2018.

If Christianson continues to fail to file accounts, and nobody makes a valid objection to the striking off, all the assets of Christianson Property Capital Limited will be forfeited to the UK Government. This would include its subsidiaries, Victory House Group Limited, Victory House 1 Limited, Victory House 2 Limited and Victory House 3 Limited.

This naturally will be of serious concern to any investors in Christianson Property Capital. Assuming Christianson was accepting investment in its bonds from 2014, investors have at least 6 years of their investment left to run.

The good news is that Companies House will often suspend a strike-off if creditors object, which they can do by emailing
enquiries@companieshouse.gov.uk with supporting evidence. However, if Christianson continues to fail to file accounts, the strike-off process will likely be resumed at a later date. Christianson’s directors also risk a criminal prosecution.

Update 18/04/2018: Christianson Property Capital Limited finally filed accounts on 17 April, and the strike-off has been suspended.

Christianson Property Capital – Unregulated loan notes paying 10% over 10 years

Christianson Property Capital offers unregulated loan notes paying 10% per annum over ten years, which is compounded and paid on maturity.

Investors have a “break clause” that allows them to withdraw 50% of their investment after 5 years.

Status

Believed to be open to new investment. The “invest” section of its website states “For more information download pdf coming soon”, but an investment brochure is still available to download from its website, and we will assume the information in this brochure stands until we learn otherwise.

The investment brochure is available to download from the website without any requirement to be a high net worth or sophisticated investor or professional intermediary.

Who are Christianson Property Capital?

No information is provided on the website or in the investment literature as to who is behind the business.

Companies House shows that Manish Gambhir is the sole owner and director of Christianson Property Capital Limited.

Gambhir was previously a director of Pension Helpdesk Limited. Pension Helpdesk Limited was dissolved in February 2014, six months after the FCA warned that the company was giving investment advice without authorisation.

Christianson Property Capital was incorporated three months later in May 2014. According to its last accounts (April 2016), the company had £1.1 million in net liabilities. This mostly comprised ~£7 million in amounts owed by related companies, minus ~£8 million in liabilities represented by loan notes such as those reviewed here.

The “related companies” appear to consist of a subsidiary, Victory House Group Ltd, which in turn owns another subsidiary, Victory House 1 Ltd. Two other subsidiaries (Victory House 2 and 3) are described in the April 2016 accounts as dormant.

How secure is the investment?

These investments are unregulated corporate loans and if Christianson Property Capital defaults you risk losing up to 100% of your money.

Christianson Property Capital “focuses on the acquisition, trading and development of property in the UK”.

If Christianson fails to generate sufficient returns from its properties, there is a risk that Christianson may default on payments of interest and capital to investors.

Investors’ money is secured on the real estate assets of the company.

Before relying on this security, it is essential that investors undertake professional due diligence to ensure that in the event of a default, that these securities are valuable and liquid enough to raise sufficient money to compensate investors if needed, as well as any other creditors that Christianson has borrowed money from, and that their security over these assets is watertight.

Investors should not assume that because the loans are asset-backed, they are guaranteed to get at least some of their money back through sale of the collateral if the issuer defaults. Investors in asset-backed loans have been known to lose 100% of their money when it turned out that the collateral was insufficient 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 Christianson Property Capital, only illustrating the risk that exists with unregulated corporate loan notes even when they are asset-backed.

Christianson Property Capital’s literature states in the risk warning at the end that investors are not covered by the Financial Services Compensation Scheme.

Should I invest with Christianson Property 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 unregulated corporate bond, this investment is only suitable for sophisticated and/or high net worth investors who have a substantial existing portfolio and are prepared to risk 100% loss of their money.

Any investment offering 10% per annum yields should be considered very high risk. As an individual security with a risk of total and permanent loss, Christianson Property Capital’s loan notes are higher risk than a diversified portfolio of stockmarket funds.

This particular bond is described as asset-backed. Before relying on the security backing the bond, investors should undertake professional due diligence to ensure that a) the security exists b) in the event of default, the security could be easily sold and would raise enough money to compensate all the investors and other borrowers, after the adminstrator deducts their fees.

Before investing investors should ask themselves:

  • How would I feel if the investment defaulted, the sale of the security failed to raise enough money to compensate all investors, 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?

If you are looking for “security” or “assured returns”, you should not invest in unregulated products with a risk of 100% capital loss.