This blog was established to help get to the bottom of how the Collins & Bone Partnership reached the very sad situation it is now in, with its partner Liam James Collins having a bankruptcy hearing on 25th January (postponed)15th March 2012 (ditto), and finally bankrupted on 9th May 2012 (case # NEWC 1517 of 2011 BKT 3472187, Newcastle County Court, The Law Courts, The Quayside, Newcastle-upon-Tyne, NE1 3LA), and David Bone Jnr declared bankrupt on 31st May (case no 100 of 2012 Wigan County Court). The partnership used the following addresses:

25 Shelton Street, Covent Garden, London, WC2 H9HW, UK

Eastern Villa, Station Rd. North, Forest Hall, Newcastle Upon Tyne, NE12 9AE (owned by Liam Collin's parents, and now up for sale)

There are 3 specific goals of this blog:

• To find out what happened to the 1m+ GBP monies that C&B raised via PNs in late 2009, 2010 & 2011. I am excluding PNs issued to ex-CBS investors, but that said, this blog will be of interest to ex-CBS investors, and there is information that needs to be obtained from this set of investors wrt when PNs were issued to them, and their duration.

• To determine what, if any, criminal charges should be brought against the partners.

• To warn other investors off doing any business with the partners, their equally inept/unscrupulous extended family members, and supportive cohorts.

When you look at the PNs, there are no specific statements on the documents that specify how the monies were to be used - how you believed they were to be used is based on whatever e-mail/phone call foreplay you had beforehand with Liam Collins. That is why it is so important that the following information is collated for this category of C&B investors on an individual basis:

1) What did you believe you were investing in, and what was your basis for believing this?
2) What investment risks were you informed of?
3) What was your understanding of the purpose to which PN monies could be put?
4) What brochures and documents were you furnished with as prt of your due diligence?
5) What due diligence did you do?
This blog is being operated completely separate to Sally & Jasmine's blog (, although we share the common goal of getting to the bottom of this mess in a professional manner. If you don't want to post anything on the blog in person, you can send an e-mail to me at - information conveyed in any such e-mails will only be posted on the blog on your behalf after any editting/your specific consent.

Ewart (The Editor)

Monday, 27 February 2012

Ex-CBS investors asked to sign 5 year PNs 22/3/2011

As far as I am aware, the first time C&B investors who invested in 2009/2010/2011 became aware of the 5 year PNs was Nov 4th 2011 - if someone was aware of this beforehand, please contact me (! It seems as though ex-CBS investors were requested to sign such PNs, with interest frozen as of 31/12/2010, much earlier than this, on 22nd March 2011, more than 7 full months before - see the e-mail below. As far as I am aware, no C&B investors who invested in 2009/2010/2011 were informed of this - again, please contact me if someone has information to the contrary! The e-mail states:

"Firstly we have the 2009/2010 Promissory Note investors. These are people who have invested varying amounts of money & are very happy to receive an interest payment each month. Something which has been paid by C&G in recent times."

This means that in the months immediately prior to March 22nd 2011, C&B couldn't even honour any of the interest payments on the PNs issued in 2009/2010/2011 - it had to rely on C&G. So all the PN monies raised in 2009/2010 had been consumed by 22/3/2011, minus a few months. And this gels with monthly payments to C&B investors became non-regular as of April 2011.
The e-mail also states:

"With this in mind, we have decided to form a ‘board’ of four fellow investors who will act on your behalf to oversee the repayment plan we have put in place."
In fact only three board members joined "THE BOARD" as follows:
Joe Sinagoga
103 Ifield Drive, Crawley, West Sussex. RH11 0EA
Robert Wakefield
John D. Chart
Barnett Alexander Conway Ingram LLP solicitors, Finchley
I will be trying to contact these board members to better understand the whole situation of ex-CBS investors from the point that they were offered 6-month PNs back in, what, circa July 2009, through to the point when they were being effectively forced to sign 5 year PNs in March 2011, which presumably some were not prepared to do ... I can only assume that Alistair McLean was one of them.

Below is the sequence of e-mails that were sent to ex-CBS investors in chronological order wrt being asked to sign 5-year PNs by C&B, and e-mails from "the board". Where e-mails were personalised (read generic, but with specific investor names inserted), I have replaced the investor's name with <investor>, and removed detailed timestamp data and restricted it to month & year to protect the anonimity of the ex-CBS investor who provided them.

The Editor


From: Liam Collins []
Sent: 22 March 2011 12:52
To: Liam Collins
Subject: Repayment Plan.

Dear Investors

During the past few months, both Davey & I have been very mindful & respectful of each & every one of your own individual circumstances. We have worked tirelessly both individually and with others to come up with a practical formula that works & is acceptable to all investors.

With this in mind, we have decided to form a ‘board’ of four fellow investors who will act on your behalf to oversee the repayment plan we have put in place. They will be given full access to all areas of the C&B business, will be part of the future decision-making process and will ensure that funds (as and when available) shall be paid to investors without favour.In short, they will become your eyes & ears on the C&B board.

Initially “the board” will meet at least once a month. Once the repayment plan is in full flow, we will meet with them on a quarterly basis. The four of them are in exactly the same position as you. Like you they wish to do all they can to see their investment returned as quickly as possible.

Following much discussion, it has been agreed that the CBS/C&B investors were & will remain the responsibility of both Davey & myself. Therefore it has been decided that C&B will pay back the debt to investors, using the C&G ‘template’ that has been running so successfully during the past twelve months.

It is important on many levels that C&B pays back the debt, not least from the point of view that Davey & I have a good property portfolio that we both wish to retain as our own personal legacy. It was argued quite forcibly that if C&G were to underwrite the C&B debt, C&G would be burdened and would be unable to make progress of its own as a result.

The plan going forward.

We have two sets of investors.

Firstly we have the 2009/2010 Promissory Note investors. These are people who have invested varying amounts of money & are very happy to receive an interest payment each month. Something which has been paid by C&G in recent times.

Secondly we have the 2007/2008/2009 CBS/C&B investors. These people invested non refundable “up front profits” in return for our sourcing, renovating & managing student accommodation, backed with either a mortgage or other means of paying the outstanding balance.

As previously stated, it is our intention to use the C&G model of Joint Venture (JV) partnerships with one subtle difference. Unlike C&G we shall concentrate on the wider residential market. This opens up the market to a wider catchment of both properties & investors. We intend to use the same advertising & marketing methods as used by C&G, together with the same property sourcing methods & the same renovations & lettings people as C&G.

Before we launch the C&B JV model, it is vitally important that each & every one of you understands and accepts the following elements in order for C&B to become successful at paying down the debt.
  1. All interest payments to cease with immediate effect.
  2. No investor(s) shall jeopardize the project by issuing Statutory demands or Winding up Orders against C&B, or its partners.
  3. All investors sign a new five (5) year Promissory Note.
  4. No payback of monies is foreseen until July 2012, although this could be brought forward by improved performance of the JV model.
We do appreciate that most of the above elements will be unpalatable. However, we firmly believe that you will want to hear things as they are, and to be given the most pessimistic scenario, rather than promises that simply cannot be met. Davey and I fully recognize that promises have been made in the past, albeit in good faith, but circumstances, naivety or our own poor judgment have conspired against us and these have not always been met. Notwithstanding this, our intentions have always been honourable and we have demonstrated this on numerous occasions. Looking ahead, any assurances or promises must be met: we fully recognize that.

Because of the inclusion of fellow investors having seen the overall picture of C&B debt & the C&G model in place & working, it is felt by one and all that the following timescales are achievable.

We have a projection that, once fully operational, C&B will be able to achieve sales of between 4 and 5 JVs per month, increasing by the end of 2012 to something like 7 or 8 JVs per month. This, of course, will hasten the return of monies to you all.

It would be foolhardy for us to embark on this epic journey of reuniting investors with their hard earned money, without emphasising once again that success depends on you - the investors. Taking civil action against C&B will result in nobody realising a return on their investment; so please remain patient & we are entirely confident the mission will succeed.

We would like to get your written consent in place by the 30th April 2011, but we will be starting work with immediate effect, as we do not want to incur a time-lag. It is anticipated that the first profits from the C&B JV will commence within six (6) months. You will appreciate that certain creditors, such as Council Tax & Utility companies must be paid as a priority due to their lack of understanding (or interest) in what we are aiming to achieve. Hence why we feel we are not in a position to promise that we will start paying down the debt until July 2012. Please remember these are deliberately pessimistic timescales, so promises are adhered to. If we under-promise and over-achieve, that’s all to the good; if we over-promise and disappoint, you will not thank us.

We look forward to speaking with you all during the coming weeks. Should you wish to be given further information, please feel free to contact either Davey or myself.

Once again, many thanks to each & every one of you for your patience & understanding & together we will make this happen.

The contents of this letter have been fully approved by the newly-formed ‘board of investors’.

Kind Regards
Liam Collins
David Bone

Collins & Bone Partnership
Tel: +44 (0) 844 811 7570
Mob: 07891294502


From: Robert Wakefield []
Sent: <march 2011>
To: <investor>
Subject: Investor update from the 'Board'

Dear <investor>
Welcome to the first investor update of many that you will be receiving from the new intermediary board that Liam and Davey have mentioned to you in their last update.

Conscious that you are wanting to hear more about this 'board' and the financial situation in general regarding your investment with Collins & Bone, this update comes from board members Robert Wakefield and Joe Sinagoga. We felt it was more expedient to get a communication out to you today, even if it is only from 'half a board'.

In future communications, you will hear from the other board members as well.

Here is Joe's introduction:-

Hello <investor>

My name is Joe Sinagoga; some of you may well know me through my property networking & attendance at various mentorship programmes.

I have a small portfolio of Buy To Let properties, mainly in the North East of England and, like so many investors back in the early part of the last decade, saw long-term property investment as a sensible alternative to Pension contributions.

I got involved with The (then) CBS Group and later with the Collins & Bone Partnership in 2008. Investing in their Trailblazer Student Scheme; I thought the model to be a good one, only to later find that the 85% LTV mortgage funding (along with most other mortgage products) was to become a thing of the past.

Like most investors I have become very concerned about my investment of late; however, I have kept in regular contact with Liam Collins and more latterly, Mark Black. I have been assisting in the shaping of Castle & Gatehouse and have witnessed the model working at firsthand, together with the painstaking diligence that has gone into making it the success that it now is.

During the past twelve months I have, like most of you, become disillusioned with Collins & Bone and the wildly optimistic forecasts that have been circulated about our investments.

I have been invited onto an intermediary board of investors, totally independent of Collins & Bone, to assist in bringing about a swift, honest & deliverable timescale for the return of monies to every single investor. Our task will not be easy, but you have my personal promise that you will only hear the facts from me – not speculation.

My background (besides property investment) is one of Sales & Marketing, having been a National Accounts Director for a major DIY manufacturing company. During the nineties I built my own powder coating business from scratch which went on to achieve an annual turnover of almost £2million.

Whilst I am a member of "the board" I make each & every one of you this promise: I will at all times endeavour to ensure that none of us in future will be fed the same old promises; that clarity & openness will be the priority. I know that the most recent correspondence has been less than palatable, but is a more accurate reflection of what can actually be achieved.

I firmly believe 100% in Liam and Davey's integrity; I would not be wasting my time if I thought their intentions were anything other than honourable.

I am happy to discuss Collins & Bone plans with you going forward and will meet with you, if you feel it appropriate.

Best wishes.

Joe Sinagoga

Hello <investor>,

Many of you will know me (at least by name) from a long time ago when I was assisting The CBS Group with finding the best Buy To Let mortgage products.  I worked tirelessly in this quest and was proud that CBS were one of the last companies in their industry sector to still have good lending deals at a time when all others had lost it.  What you were not aware of at the time perhaps is that I am one of their biggest investors. I lent money in 2007 to Liam and Davey on a promissory note, not in return for properties but purely as venture capital in return for a decent interest rate.

In 2008 and 2009 when it was clear to me that there were liquidity problems not just with The CBS Group, but generally in the whole property investment market, I decided rather than just complaining that I would become even more proactive in assisting them. My philosophy was very simple: “If they go bust I am going to lose everything my family has”. I did not get paid for the work I did for The CBS Group and worked for years helping them with advanced IT systems, websites and promotion, as well as being their banking liaison officer.

Mistakes have been made.

Do I think they have been paragons of virtue and done everything correctly? Not at all; we all know that mistakes have been made. At times they have driven me to desperation with their naivety and promises that were never fulfilled, but I have never doubted their intentions, nor do I today. A child has to fall over on rocky ground to learn that it hurts: Liam and Davey have had many falls, but the difference with them is they pick themselves up again every time. I honestly believe (without a shadow of doubt) that they have now learned from the errors of their ways and I know they have at last found their ‘light bulb’. The success of the Castle & Gatehouse model is clear proof of this: a refined business model that works every time and delivers profit and security for all.

Moving forwards for sure.

I know some of you reading this will be thinking “Well, C&G has nothing to do with me; I don’t care.” To an extent, you may be right but it is the very success of the C&G business that protects and secures your capital investment. By this I mean that while Castle & Gatehouse continues to succeed in its own right, Collins & Bone will already have replicated the model. As you know, Liam is already working hard on this right now; rightly so. I will give Liam every ounce of support that I can muster in my extremely busy schedule to ensure we all get our money back – every jack one of us. You have my personal word that I will continue to work tirelessly until we have all been repaid in full.

My background

For those of you who do not know me, my business background is largely in start-ups and small business. I am a senior partner in a rapidly developing Berkshire-based IT and digital marketing company, and I am involved in a number of interesting Joint Venture projects with entrepreneurs and start-ups.


So why a ‘board’ and the question many of you will be wanting to ask: “What’s in it for the board members?”

The appointment of the intermediary board.

Clearly better communications channels needed to be established; investors want to know what is happening. As costs have been cut, and then cut again (to protect our precious monies) it leaves Liam with little or no time to actually make any money! If Liam is selling Joint Ventures and Ready Made Deals, your investment will be paid down faster. The board members have agreed to share workloads to enable Liam to get on with what he does best: selling.

How were the board members chosen and why?

The board members were chosen for their long-standing commitment and proactive support through the more difficult times for CBS and C&B. We were also appointed because we represent a wide variety of different investor types (PN, Trailblazer, old CBS, etc.). Our business backgrounds have also been taken into account when the partners chose the board members. Liam and Davey felt that it was important to select investors who have the time, background, experience and capability to actually ensure this debt is paid down as quickly as possible. We also have the most to lose; therefore it was felt we would be the most willing to put the work in.

What’s in it for us?

To see our investment repaid to us. Nothing more: no salaries, no fringe benefits, just our money back. Unpaid helpers, if you like.

How does it work?

We act as a discretionary board with full disclosure of business assets and liabilities from Collins & Bone. We help to 'manage' creditors so that everyone gets repaid. The board members will ensure fair play and reliable repayments to all investors. We will make decisions (from time to time) on how money should be spent; for example, allocating a small percentage of profits to marketing and advertising to attract more business, thus paying down more debt more quickly.

If you would like to speak to me about your investment with C&B at any time, or would like to meet up to discuss matters with me, I will do my best to accommodate you.

Kind regards,

Robert Wakefield

PS – You can email me directly at

We both apologise for the length of this email update, but it is important that you know how hard everyone is working to protect your investment. We envisage future updates to be brief and to the point.


From: The Intermediary Board of Investors (Collins & Bone) []
Sent: <april 2011>
To: <investor>
Subject: Introducing John D Chart

Dear <investor>,

We'd like to introduce John Chart to you, our learned friend and 'legal' Board member! John is playing a vital role in preparing contracts, dealing with property conveyances and generally advising the board on matters legal. I think we can all feel a little safer knowing that we have our own 'resident' lawyer on the investors' board. He is a pleasure to work with and I can assure you a stickler for detail!

Here's John's introduction:-

I have at least two roles in life. I am a property lawyer of some 40 years' experience and also (with my wife) a property investor on a fairly modest scale. It was the latter which propelled us towards C & B when in early 2008 we met them at an investment property exhibition. We then attended a seminar in Manchester, viewed some recently refurbished houses and were very impressed. We then purchased 3 houses in Salford and generally advanced money to CBS.

From the autumn of 2008 buy to let mortgages were drying up and values falling. It became evident that repayment of the funds lodged plus interest would be long-delayed.

To their credit Collins & Bone were honest and up-front about the financial problem they had been faced with in trying to keep afloat, did later arrange the re-sale of two of the houses and did enter into a personal guarantee by way of promissory note to cover the debt and mortgage interest. They also offered my legal firm the opportunity to quote for conveyancing services, and indeed I have since last August been engaged in such legal work.

When matters went wrong in late 2008 it would have been easy for us to "throw the book at them". But we felt that the poblem was not of their own making, that we were all the victims of the then economic circumstances, and that their own honesty and transparency were beyond question. Rather than denigratory we were supportive and remain so to this day.

When I was invited to become a member of the intermediary board I accepted, as I believe that there is a role for me in assisting C & B being nursed back to good health and bringing about a return to profits and repayment of the debts to all.

Being on the intermediary board assists in my being able to keep tabs on the organisation, its strengths and weaknesses and ability to deliver.

I am conscious that I wear 3 hats: those of investor, solicitor and intermediary board member - in theory not easy to reconcile, but I believe I can rise to the challenge!

Kind regards,
John D. Chart


From: The Intermediary Board of Investors (Collins & Bone) []
Sent: <april 2011>
To: <investor>
Subject: April Update from the Board of Investors
The Intermediary Board of Collins & Bone Investors

April 2011 Update

Dear <investor>,

The purpose of these newsletter updates is for us, the Board, to keep in regular touch with you as we oversee the repayment of investors' money. We promised you all that we would be back in touch later this month with a full update on how things are going, and we have lots to report.

An overwhelmingly positive and supportive response.

Many of you will have received a call from Liam over the last few days/ weeks and Robert has also spoken to many of you. The response from you all has been a very positive message of support, albeit with understandable concerns.

Investors united!

The response to the creation of the Board and the proposals to now ring-fence your cash has been a resounding sigh of relief. Many of you have expressed how relieved you have felt just to know that something really is being done to redress the situation, and Liam & Davey would like to thank you all for your positive feedback, support and co-operation.

In it together. . .

We're all in this together folks, whether we like it or not. The recent messages have, we know, been bitter pills to swallow but we simply must unite as investors and work together for our own good.

The next steps. . .

Collins & Bone will very soon be able to start trading properties; The wysi Partnership have been setting up databases, marketing channels and other promotional activities. However, trading cannot (and will not) start until the debt is brought under control. The only way to do this has been the issue of the extended Promissory Notes, relieving the Partnership of the exposure to bankruptcy - which as we all know would result in each and every one of us losing our hard-earned cash.
Once the new Loan Deeds (contracts) are all back in to Collins & Bone and duly signed, trading can start very quickly. It is that trading (and the exponential growth in trading) that will generate the profits that will see our investments coming back to us all.
Your Loan Deed is awaiting you at the following secure server location:-
Your username is <removed> and your password is <removed> (with a zero, not a letter o).

Once logged in, you will be to access your Loan Deed in PDF format. If you do not have Adobe Acrobat or Adobe Reader, you will be able to download the software freely from the official Adobe website here.

Instructions on how to send the Loan Deed back to Collins & Bone can be found once you have logged in. Please do not send your signed Deed to The Board of Investors: we are not your debtors!

Thank you all again for your united support and enabling us to move forwards with this very difficult, but vitally important, task. We hope to be able to send another update later this month as we have run out of space (and time) and there are questions from many of you that we (the Board) would like to answer.

Kind regards,

Robert Wakefield, John Chart, Joe Sinagoga (who is abroad at present).


From: The Intermediary Board of Investors (Collins & Bone) []
Sent: <may 2011>
To: <investor>
Subject: May update from the Board of Investors
The Intermediary Board of Collins & Bone Investors

May 2011 Update

Dear <investor>,

We've quite a bit to update you on since we last emailed, so let's get straight in.


Many of you have emailed me of late asking for an update and I apologise if you have not always received a personalised reply: Personally, I see this as our biggest challenge, not the repayment of the debt! I hope you will all understand when I say I am one man, with a full-time business to run and whilst I work 16 and 17 hours a day, I simply do not have the time to give personalised and detailed replies to emails. Please remember that the monthly newsletters are for just that, and I trust you will understand; this is a preventitive measure to stop the men in white coats taking me away!

A huge thank you.

We've received the vast majority of the Loan Deeds back now, duly signed and sealed. Joe has kindly offered to be responsible for the safe-keeping of these in his vault at a secret location somewhere near Gatwick Airport. The procedure for the Loan Deeds, in case anyone is still unclear, is to check your contract is correct, notify Robert if any changes need to be made (please give clear details of changes required), and then send back to us as follows:-

Email (scanned copy) to
Hard copy (snail mail) to J. Sinagoga, 103 Ifield Drive, Crawley, West Sussex. RH11 0EA
(Oh drat! bang goes that secret location!)

You should keep the original in a safe place.

Not returned your Loan Deed yet?

If you have not yet returned your Loan Deed, it may be because you have forgotten all about it, or you may have questions about it. Please do ask us for advice if you are unsure; remember we are not Collins & Bone: we are investors, just like you. We believe the Loan Deed, which was prepared by a lawyer and Collins & Bone investor gives increased security over anything hitherto offered by CBS/ Collins & Bone and there is honestly no reason why anyone should be reluctant to sign it.

What happens next?

We've been working with Collins & Bone to prepare for our first deal. We believe we have several potential Joint Venture partners lined up, and there is certainly no shortage of suitable properties. Davey is very excited about some of the deals coming through sourcing and we can't wait to start! But we do have to wait: we need all the Loan Deeds signed and returned before trading will begin, so if you are one of those investors who has not yet sent yours back, please do so as soon as possible.

Remember, we have published some FAQs at the following location, which you may have forgotten about:

Your username is <removed> and your password is <removed> (with a zero, not a letter o).

Why do all Loan Deeds need to be back before trading can start?

This is a protection for us investors - nothing more and nothing less than that. As you all know, we're all in the same boat. A few months ago it looked like the Titanic, now we have enough life boats. To render this rescue plan safe, we need all investors onside.

Financials, accounting, investor management and updates.

I've now completed the migration of all Collins & Bone investor data across to my own systems, and have set up accounting software which now shows your outstanding balances, correct as at 31.12.2010. This is an important step, because our accounting software will now track every payment that is made to each of you/ us and show the declining balance over the loan term. We will be asking you to confirm/ update bank details with us (the Board) as it is us who will be paying you on behalf of C&B. Please don't all rush at once to provide these: we will email you when are ready to do a mass import of bank data into the program.

Because we are now just days off starting to trade, investor updates will drop back to 3 monthly after the July newsletter. Your updates will contain a brief summary of deals done, gross profits and costs, so you will see hands-on what is happening and how well things are going.

Opportunities for all.

If you would like to earn generous commissions from referring or introducing investors to the new-look Collins & Bone, where the investment is 100% protected, please contact one of us. You can also earn very good commissions from sourcing properties. You will be paid by the Board.

Have a great long weekend everyone, and we'll update you again in June - hopefully to say we've done our first deal(s)!

Kind regards,

Robert Wakefield and Joe Sinagoga.

From: Collins and Bone <>
To: <investor>

Sent: <June 2011>
Subject: May/June update to Collins & Bone investors

Collins & Bone Investors' June Newsletter

May/ June 2011 Update

Dear <investor>,

Welcome to your first proper communication and update regarding your investment with Collins and Bone.


As you will already know, The Collins and Bone Partnership have an excellent business model of sourcing, renovating and tenanting properties for landlords and other property investors. One thing they've not been particularly good at (and a few people have mentioned this) is communication! As an investor and business owner myself, I wanted to analyse what it was that a). made Collins and Bone so different, and b). what their weaknesses were (and how these could be improved upon).

It seemed to me that the partners and staff are so involved in the day-to-day running of the business that they simply did not have time to stand back and take a birds-eye view. Davey is on the road every day of the week, sourcing and managing renovations; Liam is busy dealing with sales and marketing.

Unfortunately, people remember weaknesses more than they remember strengths! So a fellow investor (Joe Sinagoga) and I decided we would take the plunge and give the boys a hand with all the stuff they don't do very well, leaving them to get on with what they do really well. It's been a mammoth challenge, and we're still in the transitional stage. So please, please bear with us over the next few weeks.

We have formed a new limited company, called St. Giles Asset Management Limited, and going forwards, we will handle customer relations and marketing. As investors ourselves, we are naturally motivated to make a success of this, and we want to deliver a very high standard of service to all investors.

We plan to increase profitability through Collins and Bone by improved marketing. I own a digital marketing and web development company, and Joe has a rich background in property investment and networking. A new website for St. Giles is being built as I write and will be going live very soon. My web company will also be using advanced IT systems to manage the business, accounting, communications and projects.

Pipelines and bottlenecks.

The marketing skills of St Giles were called upon after many of the assets being sold fell through after the Irish economic crisis. Their was a bottleneck for a while and with that some cash flow issues did arise. These are now being corrected and constant improvement is our aim.

Accounting has also been an issue with the management accounts being transferred from a previous company to St. Giles. Data feeds and sources need to be synchronised; financial accounts and bank statements need to be reconciled. Even getting the new bank accounts open and online banking access has proven to be a longer winded process than was foreseen.

The outlook for student and buy-to-let property.
In the past decade this market has emerged from a niche, to a highly in-demand investment class as investors look to build wealth in a market now under-served.

There is still a lack of high-quality accommodation for students. Independent research from Knight Frank shows that only 50% of students in the UK have access to high-quality accommodation, with 2.4 million students expected to apply for degrees in 2011.

The student property market is widely seen as the largest untapped real estate market in Western Europe. Only 23% of the demand for student beds is met by university maintained properties, while demand for university places has risen.

According to Knight Frank, student rentals have recorded growth of 5% over the last six years, compared to only 0.6% growth in commercial property.

Now is a great time to start investing in this market.
Keeping you informed.
We are now very close to launching our new product (which will combine the synergy between sourcing, renovations, lettings and sales of C&B properties). We will continue to update you on a regular basis to let you know how everything is going. Updates will contain a brief summary of deals done, gross profits and costs, so you will see hands-on what is happening and how well your investment is doing.

Opportunities for all.

If you would like to earn generous commissions from referring or introducing investors to the new-look Collins & Bone, where the investment is 100% protected, please contact one of us. You can also earn very good commissions from sourcing properties. You will be paid by St. Giles Asset Management Limited, not Collins and Bone.

We'll update you again in July - hopefully to say we've done our first deal(s)!

Kind regards,

Robert Wakefield and Joe Sinagoga.
From: Robert Wakefield & Joe Sinagoga []
Sent: October 2011
To: <investor>
Subject: October Newsletter
Re. Collins & Bone

Dear Investor,

We realise it has been a number of weeks since we have been in a position to update you.

Both Rob & Joe have been in frequent discussions with the partners, obtaining up to the minute information whenever we can.

We understand that the partners will be calling all investors next week with a full update.

The partners both wish to thank you for your continued support & patience at this time.

Would all investors please note that Robert will be completely indisposed with effect from Monday 31st, as he is going into hospital. A further update will follow when he has fully recuperated.


Joe Sinagoga & Robert Wakefield

From: Liam Collins []
Sent: 01 November 2011 17:03
To: Liam Collins
Subject: Collins & Bone November 2011 Update
Dear Investors,
Please accept my apologies that this update has taken a while coming.
As many of you may know we have been working diligently for 2 years now to get a £20m property fund underway. The client paid £150k for the contracts to be written which demonstrated they were serious. They also asked us to complete a 3 house trial piece to demonstrate that the business model worked.

The client provided the funds to purchase 3 houses. We renovated them, let them and sold them in the 6 month period as per the agreement. The project was completed on budget and delivered a 20% return over 6 months for the client. They confirmed in July in a meeting with us in France that the deal was going to begin in September.
September came and it became evident that they were waiting for their bank (Investec) to secure the lending in order to progress the deal. In October we have now been told that they cannot get the lending at the rate they wished for and so want to put the deal on hold until they can. 
We are not holding our breath any longer on this as we are all aware that lending is getting tighter by the day. The reason C&B issued Promissory Notes was to sidestep the volatility of the lending market for a short period until the lending resumed from the highstreet banks. With lending now not coming through at all and recent bills which have just been passed in Parliament have now insisted banks remain as liquid as possible meaning any future bank lending looks bleak to say the least. 
As a result we are now in a situation where a handful of PNs have now matured and the investors have asked for these to be returned. Our liquidity, not dissimilar from banks at present, does not allow us to do so. We have explained this to the investors, however we are expecting further defaults on our PNs this year and more investors expecting their capital to be returned. 
We have taken legal advice from a top practice and they have explained that we cannot now prioritise one investor over another due to the overdue PNs which have a negative effect on the solvency of the partnership. We must treat all investors (creditors) equally.
This leaves us with limited choices::

1.       David and I declare ourselves bankrupt. - For all this would wipe our debt it would also result in us losing our homes and all of our assets. This is not a route we will be taking.

2.       Go into what is called an IVA. By doing this it will protect all investors against the threat of bankruptcy but it means we have to make a repayment plan. This is a positive to those who want their cash back but a negative to those who just wish for their interest as it means interest would stop and repayment would unlikely begin before the end of 2012. The other negative of this is that to offer a realistic payment plan based on cashflow projections we would have to offer as little as 20p on the pound back and this would also take into consideration how much you invested and how much you have had back in terms of interest. So if you invested £10k and have had £1k in interest the IVA practitioner would likely only offer 20p in the pound for the £9k outstanding. The final negative is that the repayment plan should we be successful would be over 5 years minimum.

3.       We feel that the best option is for all investors to sign up to a 5 year repayment plan beginning July 2012. This would allow us time to build up our profits and liquidity and then if we are able to repay the debt down faster we can do but it will protect you all from the threat of anyone issuing a statutary demand for full and final amount or petitioning for bankruptcy.
4.       For those who are in a position to do so, we feel the best option is to trade their way out of the issue. It is possible at present for us to trade debt for equity with our investors via various routes but please email me personally and I will go through this option with you.
The good news is that we do have some options long before we look at IVA or Bankruptcy but in order to get from where we are now to putting solutions in place we must achieve 100% cooperation from all investors. It only takes one investor who has had one late interest payment or one investor who has not had their capital returned when asked to have it returned to petition for bankruptcy and everyone would lose their investment and we would lose everything we have all worked so hard for. 

I’m sure that some of you will be concerned that this email will cause a “run on the bank” to use a term which applies to banks when people all ask for the savings to be returned. The point of this email is to explain that we do not have the cash flow to pay anyone anything back at present. The reason for this is that we have geared everything for the fund to start in September and now that we have been told it isn’t we are running the small company overheads we have now on the tiny reserves we have left. For us to trade out of this and repay everyone we must be allowed in the eyes of the law to trade and if we do not get 100% of our investors to sign a new repayment plan which is realistic then we are still in an insolvent position due to overdue expired PNs which are legal threats to everyone’s investment and force C&B into a position of insolvency where we cannot solicit new business.  

So either myself or David will be calling each of you this week and next week in order to discuss the best solutions for you in this. We are prepared to lose everything ourselves if it means protecting you all as we have committed to that from the start but at present due to the lack of equity and cash flow in the portfolio we cannot sell the assets we have and it is not even fair to call them assets at this moment in time.  

To reiterate we are still in a position where this can be fixed but it requires 100% cooperation. We do not want to lose our homes and you do not want to lose your investment. We have worked the last 10 years to build up this family company and we do not want to lose it. Some of you may have taken longer than 10 years to build up the sum of money you have invested and I am sure you cannot afford to lose that either.  

I apologize for the stress this will cause people but all we can do is work our absolute hardest to firstly make sure you investment is safe and secondly find a solution to pay back ideally your investment plus interest owed and worst case your investment. We are not interested in offering 20p on the pound to any of you as you deserve all of your investment back but you must realize that if one of you is to bankrupt us at this stage that option is taken out of our hands.  

I urge you all to look at the story on the internet about Andy Shaw who had a property investment company, wanted to pay everyone back after the recession crippled his company and one person could not wait so they bankrupted him. Once bankrupt it is illegal to then repay creditors individually so his debt is now wiped and he has moved on. 

We are asking you all kindly to work with us and think not about us but about the other investors who all have worked hard for their money they have invested with us.  

If I could pray for the ultimate outcome from this it would go like this.

1) We get 100% of the investors to agree to a 5 year repayment plan, all signed and therefore no threats. We achieve the same with other minor creditors also.

2) We can then solicit new business and trade our way out of it meanwhile for those who can afford to trade their way out of it and become one of our new investors into the trading model whereby you do not actually pay anything until our services are complete thus minimising the risk. If we could achieve this then I would be very confident we can get through this.  If however the result of this email is panic and legal battles it could be a quick end to C&B and a fire sale of our assets which would achieve nothing all round.
Help us achieve the first option and we can get on with business and for those of you who have already signed up to 5 year plans may we take this opportunity to thank you again for your support.

Kind Regards

Liam Collins

C&B property list & Novocastria Lettings

This particular blog entry is work in progress, and the gaps will be filled in as the information is mined.

On Wednesday 22nd Febrruary, 2012, IFS posted the article "COLLINS & BONE HOUSES AND NOVOCASTRIA LETTINGS" on their blog, and which contained a C&B property spreadsheet. Investors by now are aware that:

  • There is preciously little equity in the C&B assets, if any.
  • The only revenue stream that C&B has is rental monies from their existing assets .... only no money is coming in. Why? More on this in a moment.
But it gets worse:
  • This spreadsheet was sent to a C&B investor in Q2 2011 by Liam Collins, yet it is already many months out-of-date as the document makes reference to mortgages "Fixed to 31/12/2010". Also of interest is the following property:
    15a Moira Street
    Mortgage balance ~98k GBP
    Valuation: 90k

The mortgage payments on this property fell behind, so the mortgage lender (it was not Mortgage Express) re-possessed the property and sold it through a local estate agent. The asking price was just under 52k (this was the going market price, not a fire-sale price), and the house sold for under 55k (there was in fact a bit of  a bidding war for the property) in November 2011. So the spreadsheet on the IFS blog is accurate up to November 2011 at best. But what is very significant is the huge disparity between C&B's valuation price and reality, so I question the accuracy of all the C&B valuations on this spreadsheet. Who valued the C&B assets, and when was this done? I have asked Liam to estimate the date of this spreadsheet.
  • I have another C&B property spreadsheet that was supplied to an earlier investor in 2008. There are 15 properties in common between the two spreadsheets. What is interesting is that the combined mortgage balances on these 15 properties increased ~200k GBP between 2008 and Nov 2011 (the best guess at this stage of the age of the IFS posted C&B property spreadsheet), yet their respective combined valuations dropped ~660k GBP. But Liam has stated that no equity has been taken out of these properties since 2008. So the only way that Liam's comment can hold true is if either:
The IFS posted C&B properties spreadsheet goes back to 2008 (in which case, why is it being sent to an investor in Q2 2011?). I checked out 16 of the 29 properties in the IFS posted C&B properties spreadsheet, and all bar one were purchased before 2008, so at least that checks out.
Mortgage payments fell behind on these properties, and Liam does not view such an activity as withdrawing equity, which implicitly it is. I think this is more likely, especially given that this is what happend to 15a Moira Street.
C&B assets in Loughborough are managed by Rami Hariri:
Business phone # 07896567013
Mobile phone # 07896567013
And if you go to this web page and perform a search on their properties, you will see that with a few minor exceptions, all are available (i.e. not rented out). All other C&B assets are managed by Novocastria Lettings:

Novocastria Lettings
36 Langhorn Grove
Newcastle Upon Tyne
Tyne & Wear NE6 1XL

Not only is this address that of a C&B asset, it is also the address used by Novocastria Developments Ltd, a company run by Mark Black & David Bone Snr. In the absence of receiving responses to the questions below, it is reasonable to assume that Novocastria Lettings is an integral part of Novocastria Developments Ltd., esp. when their web pages all have "Copyright Novocastria Developments Limited. All Rights Reserved" at the bottom. From the spreadsheet that posted in ths aforementioned IFS article, 6 of C&Bs assets:

2 Dronfield Rd
2 Peacock Avenue
4 Albert Street
36 Langhorn Close
11 Queen Street
60 Dundonald Street

appear on Novocastria Lettings web-site. I asked Liam the following questions on 22/02/2012:

[ewart]: Sally's blog indicates that the housing assets are managed by Novocastria Lettings, and you had also indicated that some of the PN monies collected in 2010/2100 were spent on the renovations of these assets.
  • How much money was spent in each of 2010 and 2011 on these renovations?
  • In terms of the rental income from these assets, what %age came back to C&B in 2010/2011 i.e. what was Novocastria Lettings' %age cut?
  • What is the history behind the management of these lettings in 2010 & 2011?
[Liam]: I am afraid to say I cannot answer any of these questions. If I could answer these questions quickly I would not be in the mess we are in. Our accounts are held by our old accountant who will not let go of them until we have paid him in full which we cannot. Novocastria manage my properties. I get nothing at all from them ever as they are running at a loss most months.

I have asked Liam to qualify the following:
  • Are there any other C&B assets managed by Novocastria Lettings not specified above?
  • What was the basis for these 6 specific properties being managed by NovoCastria Lettings as opposed to other C&B assets?
[Liam]: Loughborough properties are managed by one person and all others are managed by Novocastria.
  • What is the agreement that C&B has in place with Novocastria Lettings wrt rental revenue generated by these properties, mortgage costs and maintenance costs?
[Liam]: Novocastria takes a management fee and organises maintenance which then comes out of the total amount sent back to the landlords which in this case is David and myself. We pay our own mortgages once the rents come in. 

At least these questions do not have a dependency on accountancy records and should be readily answerable.

I also decided to phone Novocastria Lettings. Sure enough, I get Rachael who is very surprised at my call (actually, there are two Rachael Bones which I was not aware of at the time - one is David Bone Jnr's wife (maiden name Stanley), and the other his sister):

[ewart]: I first of all wanted to find out what Novocastria Lettings is. What is it? A limited company? A partnership? What is it?

[rachael]: I don't know how you got our number to be honest. But this is something you need to speak with David about, or Liam. I just cannot help you at all." ... "I am not going to go into this" ... "can you just call David on it" ... "I don't deal with anything to do with investors".

So I fired off an e-mail on 23/2/2012 with the questions below to David Bone Jnr, Rachael (whichever Rachaels the e-mail addresses and correspond to), Liam and Unbelievably, neither e-mailing Novocastria Lettings from their own web-site, or, work!!  And the very next day Novocastria Developments web-site became a black screen (maybe that's what BS stands for when David Bone registered himself as a director of MTM North East Ltd under the name of Mr B.S David :-)). So far no responses - worst case these questions WILL get answered once the bankruptcy trustee has been appointed. one is David Bone Jnr's sister, the other his wife - I assume that I was talking with the former) .

Date: Thu, 23 Feb 2012 07:27:02 -0500

What kind of a company is Novocastria Lettings (Ltd, LLP, partnership)?

When was Novocastria Lettings founded?

When did Novocastria Lettings start managing the rental of C&B assets?
What company had responsibility for managing the rental of C&B assets prior to Novocastria Lettings?

Why is Novocastria Lettings using the address of one of these C&B assets (36 Langhorn Close, Newcastle-upon-Tyne) as its business address? Does it physically occupy these premises?

Where does the money to renovate/manage these C&B assets come from?

If the answer to the previous question is (in part) C&B, how much money did C&B pay the company(ies) responsible for managing the rental of C&B assets in each of 2010 and 2011?

How much money have the company(ies) responsible for managing the rental of C&B assets paid back to C&B in each of 2010 and 2011?

What is the value of the rental income that C&B properties have generated in each of 2010 and 2011?

Tuesday, 14 February 2012

IVA investigation

In the article dated Monday, 13 February 2012 on, the statement is made that:

"If anybody wishes to advise us differently, we would love to hear from them, but, Ewart Tempest,who has made the latest blog, investigated this on our behalf last week and got the same result as we did, it is not possible."

This is an overstatement of what I did, as per below. The sum total of my efforts can best best described as understanding:
  • the degrees of flexibility in IVAs.
  • whether there were IVA practitioners who would be prepared to handle an IVA without demanding 10k-20k GBP up-front. This is what the IVA practitioners that Liam Collins/David Bone had so far approached were demanding ... monies they don't have.
It is not possible, or realistic, for anyone to find an IVA to act on C&Bs behalf without going in armed with all the facts e.g. rental cashflows, property maintenance costs, business overhead costs, mortgage costs (I don't even know what interest rates C&B are being charged on their mortgages, and whether any attempt has been made to renegotiate lower rates), number of debtors (200 now being mentioned), understanding "the situation we have", etc.  Suffice to say, I don't have this information.

The only visibility that C&B investors had been given of any attempt by the partners to enter IVA was the following statement in the e-mail sent to all investors by Liam Collins on 7/1/2012:

"We have been in contact with 5 different top insolvency firms and they have all said they will not take the case on to help us go into an IVA which would protect all of us from the damage of bankruptcy and thereby protecting your investment. Their reasons were all the same that they make their money by getting a percentage of the monthly repayment plan and if we cannot offer a guaranteed repayment plan monthly how can they make their cash?"

This did not strike me as a particularly rigorous or a determined attempt to enter IVA, and I personally believe an IVA style approach to be the best way to go to secure remaining value for shareholders. There appears to be more flexibility in IVAs than simply either a fixed monthly payment for 5-7 years, or one lump sum payments and that's it. Which is just as well, because the following is the situation:
  • Max monthly payment would be around £0-£500 per month at the moment it would be 0. Problem with IVA is getting 75% to agree to a payment plan of £1-2 per month.
[ewart]: Note that the 75% refers to the percentage of debtors who vote, not the percentage of debtors. Given the percentage of investors who either signed, or were prepared to sign, the 5-year plan PNs, achieving this should not be an issue. There is no point in such measly monthly payments, however. Unless there is a pick-up in rental income - the only worth in these assets is in any appreciation over the duration of the IVA term.
  • If interest rates move even .5% the portfolio will be cash negative.
[ewart]: all properties are mortgaged to the hilt.
  • In an e-mail dated January 17th, Liam Collins stated:
"if I am allowed to find a legal way of choosing who I pay back I would pick the following order

1.       Family members who never actually invested and never received an interest they simple gave us money to help us out in troubled times
2.       Investors who have invested in me and David personally by way of lending us money in early 2006 and 2007
3.       Investors who have invested by way of PN post CBS i.e. yourself
4.       Investors who investment we lifted out of CBS
5.       Other non  investor creditors like suppliers"

It is highly unlikely that in an IVA, and perhaps not even in a bankruptcy, setting debtors in category (4) above could be shaken off/omitted - more than 50% of the debt that C&B now has was incurred as a result of offering 6 month PNs to ex-CBS investors (~2.3m GBP, including interest).
  • C&B has 27 properties with 0 equity at present. I don't know what the average price of these assets is, let's say 150k GBP. House prices would have to increase by ~75% over the IVA timeframe for C&B to repay just the original monies (forget the interest) of their 3m GBP debt, and ~100% if you were to include the frozen interest - these kinds of increases are just not realistic over a 5-7 year timeframe. And this assumes the mortgage interest rates do not increase either, which will eat into/negate completely any profit from rent monies. So C&B are not going to be able to rely purely on an increase in asset values to cover debts ... and C&B will not be able to attract any new investor monies into the business.
To find out how rigid IVAs are in practise, I called the Consumer Credit Counseling Service (0800-138-1111) which is a charity that offers debt counseling and free IVA consultation - there are no up-front costs. It seems that IVAs can be quite flexible, with the ability to suspend monthly payments by up to 6 months, payment of lump sums at the end of the 5-7 year period - they didn't charge any upfront fee, but would take 15%+VAT off any monthly payments made.

[Liam response]: We have called this company a long time ago and they are great for reducing a personal bank loan payment to £1 per month but they are rubbish for dealing with the situation we have. The people trained are not qualified to deal with this situation and the complexity.  I really do not see how we can ever repay anyone now. We had so many funds set up all which were capable of repaying the debt and all have now been ruined by the (Sally & Jasmine's) blog.

That has been the full extent of my IVA investigation for C&B, which is to say bugger all, pardonnez mon francais.

Sunday, 12 February 2012

Q&A document compiled with Liam Collins

During December 2011/January 2012 I worked with Liam Collins on a Q&A document with the view to this being sent to all C&B investors - it never was. The reason Liam gave was that the answers to the questions were covered by C&B's response to the FT questionanaire that they posted on their blog ( As such, I see no harm in now making the Q&A document available to all C&B investors via this blog.

Question set 1
You are calling in the receivers, so they will presumably be winding up the partnership, and extracting any value that there is. But the 5-year plan PNs are with C&B. So what is the contractual/legal obligation for the directors to repay investors over the next 5 years with C&B going into receivership, as any receivership process will be over well before 5 years?
  • Liam answer: Any agreements with C&B will be void as the partnership will be wound up. This was only ever going to work if we managed to get 100% to sign.
What is the nature of the C&B partnership wrt liabilities of directors?
  • Liam answer: There are no directors only 2 partners.
What is the sum GBP value of C&B investor investments?
  • Liam answer: just over 4m if you include interest but receivers would not look at this they will most likely look at what you invested and what you have had back. So if someone invested 10k but has had 1k in interest they will likely look to call it 9k which will reduce the liability considerably.
What is the sum GBP value of C&B investor investments of investors who have signed the 5-year plan?
  • Liam answer: This is not relevant as the plan has not worked.
What is the sum GBP value of C&B investor investments of investors who have refused to sign the 5-year plan?
  •  Liam answer: Again not relevant.
The 5-year repayment PN states: "Payments will be made to the Creditor from net profits pro-rata in proportion that the Debt bears to the total debts to Creditors". So what will happen to investors who have not signed the 5-year plan?
  • Liam answer: Again not relevant as this was the plan if C&B was allowed to keep going. The 5-year repayment PN states: "The liability of Liam Collins and David Bone Jnr shall be joint and several" This means that you are both liable for all the debts and liabilities of the firm.
What indemnity insurance, if any, do either of you have?
  •  Liam answer: Again not relevant as this plan is now void. 
Has a liquidator been appointed yet, and if so what are his/her contact details, and when & where is the bankruptcy hearing to be held?
  •  Liam answer: The hearing is in the week commencing 23/1/2012.
What is the nature of the C&B partnership wrt the liabilities of its individual partners?
  • Liam answer: we have 27 assets 11 are held in my name, 2 are held in Davids name, 5 are held in David and my name, 7 are held in mine and a former business partners name but he will be taken off the properties as he has no right to any of them. David’s personal home is in the joint name of him and his wife. We did have 2 others but they have recently been repossessed.
In the Collins & Bone collateral document (attached), there is the statement: "Additional security in that all Directors assets are held in the partnership as collateral." Was this meant to say "partners" as opposed to "Directors", and what are their current assets and associated value?
  • Liam answer: It simply means our properties act as security and that in the event of bankruptcy they would be sold.
When exactly was the C&B partnership formed?
  • Liam answer: We were partners in 2002 but really it was not until 2005/6 that Davey became an active partner - before this most of the track record and properties were my own.
Given that the partnership is going into liquidation, is it possible for the terms & conditions of the partnership to be disclosed?
  • Liam answer: I need to find the partnership agreement. I believe it was a verbal agreement but we may have a written one. We are family and have been close all our lives so we have not had the need for a written one.
The figure of 4m for C&B investor investments, what is this comprised of? PNs and/or C&G loans and/or family loans and/or etc. Can we have the breakdown?
  •  Liam answer: Total invested on PNs originally between 2006 and 2009 = £430 k These figures are based on what invester’s originally invested and does not include any interest owed but does not take off interest from all parties who have had it so I will need to refine this but this is a ball park figure Total invested in CBS which was carried over = 2.3m this will be reduced to around 2m as it includes interest as per the PN i not paid on time. Total invested in C&B post 2009 = 1.5m which will come down to close to 1m when you take all interest off which investors have had. Total other creditors = £200k Total debt = 400 + 2m+1m+ 200 = around 3.6m So the conclusion is still no one will receive anything from the sale of the assets unless the market moves dramatically. These figures all need tightening but are close enough for you to see the picture.
What was the value of loans made by C&G to C&B, and when were they made?
  • Liam answer: This will need to be thoroughly investigated by a forensic accountant.

Question set 2
From your blog:
"Liam & Davey, in good faith, agreed to take all non-refundable deposits (not loans as stated in the blog) that had collapsed with CBS into Collins & Bone which would offer some protection to existing investors and allow them to benefit from the existing Collins Bone portfolio as a degree of protection.A gentleman’s agreement existed between Mark & David Snr and Liam & Davey whereby should the variant model used by Castle & Gatehouse take off as expected that the profits dispersed would be used in first instance to redeem Collins & Bone investors. This was an offer of goodwill and nothing more; no guarantee was ever asked or offered, and no written agreement of any kind was made."
What was the value of debt that C&B took on from CBS?
  •  Liam answer: around 2.5m
What was the date on which C&B took on this debt?
  •  Liam answer: end of 2009 when CBS was liquidated
How can the taking on this debt by C&B be viewed as at all fair to, or in the best interests of, C&B investors?
  •  Liam answer: It is not fair I agree. I believe if I was making the rules those who had not originally invested in C&B should be treated differently. We know that the FSA treats them differently but it is whether the receiver will. If he does then he will make C&B PN investors a priority which I agree should be the case. That said all this is largely irrelevant who is prioritised as there will be nothing realised from the sale of the assets and so there will be nothing to prioritise. It is now down to us and our moral obligations as to who we choose to prioritise if the law allows us to do so as I am sure you will understand I am happy to pay back those who have supported us and those who have made it difficult I have no intention of paying a penny back.
Were C&B investors consulted at all about the taking on of this debt?
  •  Liam answer: To those who asked the question they were always given a straight answer. The track record was there for all to see on companies house and when anyone asked the debt position of the company I have always given a straight answer. We always had a great deal of commercial equity but as the houses have dilapidated as we have prioritised investor interest payments over all other things including family wages and repairs. We are now left with properties which we have many voids. We currently have 14 rooms empty in Loughborough alone because of this.
Since these debtors were taken on by C&B, what is the GBP value of monies that have been paid out to them since?
  • Liam answer: Since the debt has been taken over almost zero has been paid back in capital repayments as interest to C&B investors was always prioritised.
[ *** ewart ***]: From subsequent answers given, the amount paid back in capital repayments to ex-CBS debtors is circa 300k GBP, which is not insignificant given the value of C&B PNs taken out in 2010/2011. Will you give consideration to updating your answer above with this amount?
I asked this question previously, but the answer given did not address the question. The question is why was debt from a completely separate company (CBS) brought into C&B, and how could doing this possibly be conceived as being in the interests of C&B investors? You were not legally obligated to bring this debt into C&B, so why did you?
  • Liam answer: I have answered this sufficiently many times and yes you do have my answers.
[ *** ewart *** ]: Based on the above answer from Liam, I will infer the answer to be as per the excerpts below, but it doesn't answer the question of how this could possibly be viewed as fair, or in the best interests of, C&B investors. 
Excerpt from the official C&B blog:
"The relationship between Castle & Gatehouse, CBS and Collins & Bone is simply stated. Liam & Davey founded Collins Bone many years ago (8-9 years ago) as a partnership to build their own property portfolio. Having amassed some 30+ properties they began to provide property investment services for other investors based on their model of student property and room-by-room rentals. They founded CBS and enjoyed some success in the later stages of the 2000-2007 bull market. David Bone Snr and Mark Black were employed in the later stages of CBS in the months preceding the mortgage collapse. The universal withdrawal of 85%LTV mortgages crippled the CBS financial model, which relied entirely upon the availability of mortgage credit. Several avenues were pursued to try to adjust to the changed landscape and the business model underwent several iterations in response to a worsening credit market. Ultimately CBS was unsuccessful in attempting to re-invent its business model and collapsed. At this point Mark Black and David Bone Snr pursued a variation of the model through a new vehicle, Castle & Gatehouse, which utilised cash joint ventures to trade property without the need for increasingly sparse mortgage approval. It traded separately to C&B and raised its own funds. Liam & Davey, in good faith, agreed to take all non-refundable deposits (not loans as stated in the blog) that had collapsed with CBS into Collins & Bone which would offer some protection to existing investors and allow them to benefit from the existing Collins Bone portfolio as a degree of protection. A gentleman’s agreement existed between Mark & David Snr and Liam & Davey whereby should the variant model used by Castle & Gatehouse take off as expected that the profits dispersed would be used in first instance to redeem Collins & Bone investors. This was an offer of goodwill and nothing more; no guarantee was ever asked or offered, and no written agreement of any kind was made."
 Excerpt from Liam to all C&B investors dated 12/01/2012:
"Yes I was in court last year and yes I did offer to pay back the investor via dancing. He laughed at the proposal and so I did not. If anyone is happy with me dancing to pay back cash I will happily do what it takes. It may take some time but my commitment is absolute. This was also a CBS investor, someone where we had changed his none refundable deposit into a debt for no reason at all other than good will. He has pursued us aggressively and I expect him to continue to but simply so that you all know. This is a true story and I did offer to pay him back via entertaining. At no point may I add did I ever say i will pay you back via raising new investment and you will not find any investor who has been paid back via raising new investment so for those thinking this was another Bernie Madoff scam it is far from it. We should never have taken over debt from one company as unfortunately the person we offered to protect is also the person making us bankrupt. It is for this reason that no matter what we do moving forward we cannot ever offer personal guarantees to anyone ever again only gestures of goodwill and gentlemen’s agreements to pay back what we can when we can."
In a previously answered question you were asked whether C&B investors were consulted at all about the taking on of debt from CBS, to which you responded in part with:
"To those who asked the question they were always given a straight answer. The track record was there for all to see on companies house and when anyone asked the debt position of the company I have always given a straight answer."
What track record were investors supposed to be looking at? The C&B partnership was a completely separate standalone company that has no documents whatsoever registered with CH (if so, under what company #?). Please specify the exact CH documents you are referring to that constitute to this track record.
  • Liam answer: I answered this previously saying that any investor could type my name in and see that CBS had been bust in 2009 or was in liquidation this caused many investors to ask questions. It is totally unrealistic to think we would write on our literature “beware we have a track record of failure as our last company is in liquidation.” If you look up the most successful businessmen in the world you will see a wake of liquidated companies but I do not see Richard Branson advertising on Virgin that by the way before you get on this flight be aware that Mr Branson has a criminal record. It simply is not something any businessmen would right. There is transparency which companies house allows for and there is stupidity. I have always answered all questions relating to CBS with honesty and integrity.
From the time that C&B was founded up until now, at what periods of time did the following formula hold true?:
(equity in the partnership) <= ((value C&B investors PNs) + (value C&G loans) + (money loaned from family)) 
  • Liam answer: This is impossible to answer without having every single rent statement for each month from the beginning of 2004. With CBS Lettings, Diggs and Patrick Properties all liquidated this is an impossible task. What I can say is at any one point when we took an investment we believed that we would have enough equity commercially to sell the assets.
And following on from the above question, why was the above permitted to become so negative before you decided to liquidate the company? I mean, ignoring the 2.5m debt taken on from CBS (which should never have been done), and given that there is preciously little equity in C&B, why was the imbalance allowed to grow to 1.5m before calling it a day?
  • Liam answer: Will answer these in parts: a) why was the above permitted to become so negative before you decided to liquidate the company? We always had a business fund about to begin whereby the cash flow would allow us to repay the principle loan. We also had enough cash flow until recently to always cover interest payments from the rental income. b) I mean, ignoring the 2.5m debt taken on from CBS (which should never have been done), The 2.5m debt was neveignored far from it we did everything within our power to protect both the CBS investors as well as C&B investors. To say it should never have been done is accurate when speaking commercially but in terms of ethics we believed that to say to people it was a non refundable deposit and tough luck was too harsh and we believed it was right to give personal guarantees. c) and given that there is preciously little equity in C&B, why was the imbalance allowed to grow to 1.5m before calling it a day? We had to look at the cash flow all of the many funds we had set up would generate and look at realistic scenarios. At the time assuming everything we set up would fail was not realistic but it now shows you have to look very differently in this market. However I still feel if you plan your business around the absolute worst case scenario no one would ever do any business. I cannot expect anyone to appreciate this statement without knowing just how many things we had set up and how many failed.
At what point (date) did C&B stop taking on new investors, and what was the value of: ((equity in the partnership) - ((value C&B investors PNs) + (value C&G loans) + (money loaned from family))) at this time?
  • Liam answer: April 2011 was the last loan from a close associate which was entirely unsolicited and we were reluctant to do so but at the time we had completed our audition piece with flying colours for Matterhorn and they had confirmed business would start with an investment of 3m. 2010 was the time we stopped taking new investors hence why we have stated we would not take another new investor into C&B so it is a waste of time trying to protect investors. Since 2010 all we have sold as a family group of companies is either finished properties or structures whereby the investor keeps the money in their account.
If a potential C&B investor had come to you and said "I cannot afford to loose this money", after what date in C&Bs history would you have said "this vehicle is not for you", and what is the basis for selecting this date?
  • Liam answer: As a salesman it was my job to sell but that said after April 2011 I said to everyone and I remember the call “Even if someone wanted to give us cash now we cannot take it as I am now sick of being led along by Matterhorn. That said Matterhorn did come back later to renew confidence in the deal but despite this I was not comfortable about taking any new investments.

Question set 3
Of the bricks-and-mortar assets owned by C&B, what is the GBP value of investor monies tied up in these assets?
  • Liam answer: To my knowledge no investors money has been used to buy the current assets as we last bought an asset for C&B in 2008.
What exactly was money subsequently invested in C&B post 2008 used for?
  • Liam answer: We never received an investment at any one time above 150k into the collateral product so for that reason no one person was ever offered the Harrods escrow account which we had or the first charge over any assets. The average investment was £20k all investors knew you cannot buy a house for 20k and when on the phone the answer I gave was for those who asks. We have one account where the monies are deposited and this is also our trading account so if there is 20k in and we manage to raise another 80k that week then yes we will use that to go and buy a property renovate it and then sell it as this model had been proven by us to make substantial returns. The problem is when the investment comes in slowly over periods of time and so is used in running costs lowering the amount possible and decreasing buying power. If investors had invested all at the same time then we would be in a very different position no doubt as we would most likely have a great deal more assets. As competition for Google ads rose and budgets increased the cost for raising investment itself increased, overheads increased and the frustration of major funds not kicking off put an enormous strain on the business. Investors were offered 10% annually or 8% monthly and almost all went monthly putting a huge strain on monthly running costs and a further pressure to get the large funds underway. If you look at the brochure attached you can see that The fund – never took off after huge costs due to an old investor who ruined all chances. The syndicates were a great idea but were deemed unsuitable after the change to a coalition government and tightening of FSA. The readymade deals we failed to sell after our partners in Northern Ireland who were selling these lost their financial backing. And sadly after all of this failure together with other products being withdrawn due to FSA regulations like collateral we are left with only one thing which sold, the C&B PNs which was a debt instrument meaning all we are left with here is debt. But make no mistake about it we do have a plan for a way out and we will pay this back. One other point is that some investors think that they should have been given a charge over assets but they unfortunately would never have been offered this as they invested less than 150k, others say I had told them their money would be in escrow even though this is never the case for less than 150k and I would never have said that. Other investors think that they invested in the company and have a right to see accounts and make decisions. No one person has ever invested in a company of mine they have only either leant us money or put down a none refundable deposit. Some investors think that the money should have been kept in escrow and in hindsight I have to agree but it was not and they were not sold on it being so.
The properties that C&B acquired <= 2008, how were these paid for? Were they purchased exclusively using mortgages given that there is no equity in these properties today?
  • Liam answer: They were paid from release of equity, dancing money and personal loans from family and friends. This was the birth of the birth of Promissory Notes which we would later come back to in 2010.
How much investors monies in the form of PNs did C&B receive in each of the quarters for 2010 & 2011? From an answer to a previous question, the total was just above 1m.
  •  Liam answer: Without going through accounts I cannot say and this is a lengthy task which I am more than happy to do if asked by an official body but for the nature of this email I am happy to leave this question as the total is just over 1m. I fail to see the relevance here of quarterly breakdown.
Post 2008, was there any equity taken out of properties that C&B owned by virtue of mortgaging or being used as security against other loans that subsequently went pear-shaped?
  •  Liam answer: no In response to a previously answered question, you made the statement: "If you look at the brochure attached you can see that The fund – never took off after huge costs due to an old investor who ruined all chances."
What brochure, and section thereof, are you referring to (there was no e-mail attachment)? The C&B collateral document?
  • Liam answer: Apologies I was referring to the one attached (CandBoverview.pdf) which was later changed as the FSA would not allow us to use terms like Asset backed securities as they should only be used for referring to debt instruments like bonds or FSA regulated products. Remember there is a huge difference from an FSA authorised Fund and an FSA regulated Fund. We had an FSA authorised Fund.
Given that C&B purchased no properties after 2008, do you feel that C&B used monies raised through PNs in a manner consistent with the C&B collateral document (copy attached)?
  •  Liam answer: All investments above 150k would have had a separate Harrods account as promised and would have had an individual charge and first charge over an asset which was debt free. This was the collateral model lifted from C&G and reskinned in an experiment to see if C&B was better suited to market it. No one actually ever invested above 100k therefore no one was given an escrow account of a first charge. This cannot be mixed up with those who invested below 100k. If someone invested 10k the intention was to use the loans to buy renovate and sell assets. It was used for renovations this is fact and it was used to fund the sale of assets but it could not be used for purchasing because 10k is never enough and has never been enough for many years to buy a house as you know. So for those who think that they should have owned a part of a house, this would assume we were selling a syndicated model which we were not. We tried to sell a syndicated model used a huge amount of resources to get this off the ground as it was a lovely model but the FSA deemed this unsuitable as they classed it as a collective investment scheme which would need regulation. We spent some time and money sitting the exams to get FSA regulation and passed the first set of exams but did not have the time nor the money to continue so we simply pulled the product.

Saturday, 11 February 2012

A Request For Insight From Ex-CBS Investors

I don't have much visibility of the terms and conditions of the PNs that ex-CBS investors were issued. C&B took on ~2.3m GBP debt in the form of CBS investors who had unsecured deposits with CBS. A liquidator for CBS was appointed 18/12/2009, and David Bone Jnr on 31/01/2012 told be me that these investors were given 6 month PNs and, I quote:

    "The strategy became to then start repaying it back after 6 months
      and then everybody would be fine and wait. I don't think the plan
      was ever to pay everybody back within 6 months, we were just
      trying to buy time to get the fund (Pointon York) going, to get
      the first profit in, to get it off."

It is Alistair McLean, one of the former CBS investors, who is bringing the action against Liam Collins to have him declared bankrupt. So if Alistair, or one or more other CBS investors can come forward and explain the following, this would be appreciated:
  • When were the 6 month PNs issued?
  • Were any monies paid back to ex-CBS investors at the end of this 6 months?
  • What was offered at the end of this 6 month period, as I assume the PNs were substantially not paid off as the fund with Pointon York never happened?
 Again, post an entry on the blog, or reply directly to The Editor - any information sent to The Editor is completely confidential, and nothing will be posted on the blog unless you want it to be.