Kayboo Limited was incorporated in 2010 and in 2011 bought the luxury Hurst House Hotel in Laugharne, Carmarthenshire before renaming it The Corran Resort and Spa.
Keith Michael Stiles, currently from Donegal, was appointed director of Kayboo in August 2012 and was responsible for the company’s investment program – known as the fractional ownership program – which secured funds to expand the hotel.
The condominium scheme saw Kayboo agree, as the landowner, to grant a company limited by guarantee a 999-year lease on each individual hotel room. The limited partnership of guarantee would then grant a sub-lease to the hotelier who would pay rent.
Investors would buy a membership in the company limited by guarantee, representing a fraction of this room, and would be entitled to a share of the rent paid by the hotel operator.
Kayboo, however, entered administration in October 2016 and the company’s insolvency sparked an investigation by the Insolvency Service.
Investigators found that Kayboo had received £6.4m for the existing hotel building (known as ‘phase 1’) but the company only registered 3 leases for investment from worth £585,000.
Further investigations revealed that Kayboo had misled investors into believing that a 28-bedroom development at a nearby semi-derelict farmhouse at East House Farm (known as “Phase 2”) presented a low risk, that the property had been secured safely and that the investors would. be protected if the company becomes insolvent.
Kayboo received £10.6m from investors to develop phase 2. But no leases were registered, most of the property was never bought by Kayboo and secured lenders gave no permission for the project.
On October 7, 2022, the Secretary of State accepted an 8-year disqualification recognizance from Keith Stiles, after he did not dispute that he allowed Kayboo to mislead investors and that he had obtained more than £500,000 in deposits from December 2015 after he should have known the company was insolvent.
Effective October 28, 2022, Keith Stiles is prohibited from engaging directly or indirectly in the promotion, establishment or management of any business, without court authorization.
Mark Bruce, Chief Investigator for the Insolvency Service, said:
Keith Stiles allowed his company to distort the real risks of his complex investment program to investors. Additionally, he allowed the company to continue taking hundreds of thousands of pounds in deposits when he should have known the company was insolvent and unlikely to meet future commitments.
Thankfully, Keith Stiles has been retired from the corporate arena for quite some time. His disqualification should serve as a stern warning that we will investigate failed investment projects and sanction administrators who mislead the public.
Notes to Editors
Keith Michael Stiles is from Donegal (Ireland) and formerly Studham (Bedfordshire) and his date of birth is March 16, 1959
Company Kayboo Ltd (company registration number 07394929).
The disqualification of Keith Stiles ends a series of investigations into individuals linked to Kayboo, including:
Solely for the purposes of the Corporate Directors Disqualification Act 1986 and for any other purpose consequential to the disqualification undertaking, Mr. Stiles has not disputed the following matters:
“I allowed Kayboo Ltd to mislead investors from 2013 to 26 February 2016 in the sale of split leases in Phase 2 of the Corran Resort, contributing to the loss of their investments totaling £10,603,700:
- Marketing materials led investors to believe the East House Farm development would be completed within 12 months, as part of a hotel complex in which they had purchased fractional leases. They were assured of security, that the leases were available for purchase, and that they could sell their leases on the open market. They were assured that in the event of Kayboo Ltd’s insolvency they would remain members of a company with a long lease on the room and that they had the right to appoint a new operator to run the hotel. The only direct references to properties not owned by Kayboo Ltd were in the ‘Lease and Sublease Agreement’ (which formed part of the contract documents provided to a number of investors) which refers to a ‘Lease and Sublease Agreement’ ‘acquisition’ between Kayboo Ltd and the current owner and contains a condition that the former agreement is conditional on Kayboo Ltd acquiring ownership within 12 months, and the sale and company membership agreement (which has been provided to all investors) which mentions “upon acquisition of the property”. Otherwise, this information has not been disclosed to investors.
- However, East House Farmhouse and 5 of the 8 barns were at no time purchased, at no time subject to an unconditional purchase agreement, and no clearance was obtained from the secured lenders controlling them to sell fractional leases on them. Legal advice was given to Kayboo Ltd on 3 June 2013 not to trade contracts for room sales without a firm agreement in place with the secured lender on the 5 barns.
- Kayboo Ltd further failed to disclose to investors that its attempts to obtain planning permission for Phase 3 of the development, vital to the success of the entire development, were rejected on June 17, 2013 and (appeal) the October 27, 2014, or that Kayboo Ltd had applied on March 26, 2015 for a substantially amended plan of 200 lodges and restaurant, which was then rejected on December 4, 2015.
I authorized Kayboo Ltd to accept £557,400 from investors from 7th December 2015 to 26th February 2016 at their unreasonable risk and ultimate detriment, after I should have known that Kayboo Ltd was insolvent.
Forfeiture undertakings are the administrative equivalent of a forfeiture order but do not involve court proceedings. Individuals subject to a disqualification order are bound by a series of restrictions.
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