Court crushes windscreen recycling business
A group of companies that lured investors into paying £2.3m for shares in a recycled windscreen glass scheme has been shut down in court.
The four companies, headed by Magna Group plc, have been wound up in the High Court after an investigation by the Companies Investigation Branch (CIB) of the government’s Insolvency Service.
A service spokesman said in a statement this month: “Magna plc failed to comply with Financial Services Authority regulations governing the sale of investments.”
The group also included Magna Engineering, Magna Recycling and Magna Toughened Glass.
It claimed it could generate massive profits by extracting the resin Polyvinylbutyral (PVB) from recycled vehicle windscreen glass.
Shares in the company were reportedly sold via a cold-calling sales pitch scheme with would-be investors lured by pledges of big cash returns.
But the group’s recycling plant near Selby, North Yorkshire failed to generate anything other than peripheral orders.
Investigators found sales totalled less than £40,000 over three years yet shareholders had been told to expect turnover of “tens of millions of pounds” within two years of operations starting.
They were also told of imminent orders and expansion plans that never materialised and given a £150 million company valuation the Insolvency Service described as “totally unfounded”.
Instead, the group ended up owing creditors more than £1.1 million.
But, investigators say because of the company’s “failure” to keep proper records it could not say how many shareholders it had.
They estimate the group received up to £2.3m from purchasers of preference shares, of which 40 per cent was paid to a third party share selling agent employed by the company.
The registered office for all four companies was in Highfield Road, Hall Green, Birmingham.