Gavin Woodhouse loses control of three of his businesses in High Court ruling
Video report by ITV News Business and Economics Editor Joel Hills
Gavin Woodhouse has lost control of three of his companies after a judge decided his business model appeared to be "thoroughly dishonest" and a "shameless abuse of the privileges of limited liability trading".
At a hearing at the High Court, initiated by seven people who have invested money with Mr Woodhouse, Judge Barber ordered the immediate appointment of Phil Duffy and Sarah Bell, of the insolvency firm Duff & Phelps, as Interim Managers.
This means the powers that Woodhouse possesses as director cease with immediate effect and Duff & Phelps takes over the running of those companies until a full hearing.
The ruling applies to MBI Hawthorn Care Ltd and MBI Clifton Moor Ltd - two companies Woodhouse set up to build care homes - and Afan Valley Ltd, which is raising money from amateur investors to construct a £200m adventure resort in South Wales
Judge Barber said she was "entirely satisfied" that the court needed to take "immediate action" as all three companies are or are likely to become insolvent.
She added: "This is not just insolvency it is about what has been going on behind the curtain of limited liability. These intercompany loans [have been] written off in their millions [of pounds]. This is investors’ money."
Judge Barber said investors had paid money to Mr Woodhouse in the belief it was to be ring-fenced to deliver a specific project but that “this was unture”
Instead the companies’ own records and accounts showed that "money has been paid out, often as so called loans to other companies in the same ownership [as Woodhouse] with little or no prospect of recovery. In a number of cases, such loans, running to millions, have been written off as'irrecoverable' already."
A full hearing to consider whether the three companies should be placed into administration will take place at a later date.
Judge Barber said Mr Woodhouse, who didn’t attend the hearing, should be in no doubt that the companies will "all end up in the hands of office holders".
In the last six years, Gavin Woodhouse has raised more than £80 million from amateur investors to build care homes and to acquire and refurbish hotels.
But last week ITV News and the Guardian revealed that many of his projects have stalled and some investors aren’t being paid their returns. Around £15 million appear to have gone missing from the accounts of his companies.
Mr Woodhouse strenuously denies any wrongdoing and has promised that investors will be repaid. He argues he has not had enough time to defend himself and assured the court he will produce up-to-date management accounts, but has so far failed to produce them.
"He’s had a week and he’s got no answers," Judge Barber said.
"If he [Woodhouse] had any sort of accounting system in place he should have [the accounts] available at the flick of a button ... either he has accounts which show a rosy view, in which case where are they? Or he doesn’t have them, in which case how can he assert that everything is rosy?"
A third care home company - MBI Walsden Care Ltd - avoided an interim administration order as it is no longer trading and Woodhouse is no longer a director.