Keith Stiles, the director behind a luxury Carmarthenshire hotel, has been disqualified for eight years after he allowed a company to “mislead investors”, according to the Insolvency Service.
Kayboo Limited was incorporated in 2010 and, in 2011, purchased the luxury Hurst House Hotel in Laugharne, Carmarthenshire before renaming it The Corran Resort and Spa. Stiles was appointed a director of Kayboo in August 2012 and was responsible for the company’s investment scheme – a fractional ownership scheme – that secured funds to expand the hotel.
The Insolvency Service said: “The fractional ownership scheme saw Kayboo agree, as landowner, to grant to a company limited by guarantee a 999-year lease on each individual hotel room. The company limited by guarantee would then grant a sub-lease to the hotel operator who would pay rent.
“Investors would purchase membership in the company limited by guarantee, representing a fraction of that room, and become entitled to a share of the rent paid by the hotel operator.
“Kayboo, however, went into administration in October 2016 and the company’s insolvency triggered an investigation by the Insolvency Service.”
Details
Investigators at the Insolvency Service found that Kayboo received £6.4m ($7.18m, €7.36m) in respect of the existing hotel building (known as phase one), but the company only registered three leases for investments worth £585,000.
Further enquires discovered that Kayboo “misled investors” to believe that a scheme to develop 28 rooms in a nearby semi-derelict farmhouse at East House Farm (known as phase two) was low risk, that the property had been safely secured, and investors would be protected if the company became insolvent.
Kayboo received £10.6m from investors to develop phase two. But no leases were registered, most of the property “was never purchased by Kayboo and secured lenders did not give any permission for the scheme”, the Insolvency Service said.
On 7 October 2022, the secretary of state accepted an eight-year disqualification undertaking from Stiles, after he did not dispute that he allowed Kayboo to mislead investors, and that it secured over £500,000 of deposits from December 2015, after he ought to have known that the company was insolvent.
Effective from 28 October 2022, Stiles is banned from directly, or indirectly, becoming involved in the promotion, formation or management of a company, without the permission of the court.
‘Stark warning’
Mark Bruce, chief investigator for the Insolvency Service, said: “Keith Stiles allowed his company to misrepresent the true risks of its complex investment scheme to investors.
“Furthermore, he allowed the company to continue taking hundreds of thousands of pounds worth of deposits when he should have known that the company was insolvent and unlikely to honour its future commitments.
“Thankfully Keith Stiles has been removed from the corporate arena for a significant amount of time. His disqualification should serve as a stark warning that we will investigate failed investment schemes and sanction directors who mislead the public.”
Stiles’ ban concludes a series of investigations into individuals linked to Kayboo, including:
- A 12-year disqualification, commencing in January 2019, of Paul James Manley, Kayboo’s joint owner; and
- A nine-year disqualification in July 2021 for August Richard Templar (formerly known as Matt Roberts), the former manager of Hurst House Hotel.
