Courts shut down anaerobic digestion investment company

A company that sold bonds in anaerobic digestion (AD) plants that were never built has been shut down after it failed to pay back £2.5m to investors.

The court in Manchester heard that between July 2015 and September 2016, UK Renewable Investments (UKRI) sold corporate bonds to 208 people raising £2.5m, with investors believing that their funds would go towards building 15 anaerobic digestion plants.

The bonds had a five-year term and were to generate an interest rate of 11% per annum. Interest payments were to be paid every six months after the first year and the bonds were to be redeemed in full at the end of the five-year term.

The majority of the £2.5m was loaned to a separate company called Bio Green, who was placed into administration in May 2017.

As a result, the company could not repay the capital and interest rates due on its loan from UKRI. This in-turn meant UKRI was unable to meet the loan and interest payments due to the bondholders.

Investigators also found that Bio Green has only paid loan interest to UKRI totalling around £15,000, while UKRI has only made interest payments to its bond holders of just over £14,000.

David Hope, chief investigator for the Insolvency Service, which is a government agency, said: ‘Despite accepting millions of pounds of investments from members of the public, the company failed to exercise appropriate governance and control over how those monies were spent.

‘Unfortunately, it is the investors who will suffer and this should serve as a warning that there are strict obligations companies need to adhere to when they raise money from members of the public.’