Two connected London-based companies, 10 Little Pigs Limited (10 Little Pigs) and Magic-Berries Limited (Magic-Berries) have been wound up in the High Court in the public interest for the misleading promotion of two franchising opportunities.
The petitions to wind up the companies were presented following an investigation by Company Investigations, part of The Insolvency Service.
10 Little Pigs operated a pig rearing business in Thailand, whereas Magic-Berries distributed an imported health drink.
Both companies advertised on UK websites, offering franchise opportunities and exaggerating the likely rates of return for investors, on the basis of past experience, despite the fact that the each company was only incorporated in 2010.
The investigation also found that both companies purported to offer shareholdings to investors, but despite accepting payments, they failed properly to issue or allot any shares to such investors.
Edward Biggs was the sole shareholder and sole director of both companies.
10 Little Pigs offered franchise opportunities in Thailand involving rearing pigs for sale in the Thai market. The company offered a series of investment levels from 15,000 to 50,000 with advertised returns on investment of 22%-44%. Magic-Berries, trading as Zingaro, offered franchise businesses selling health drinks from various outlets in the UK.
The investigation further found that:
10 Little Pigs offered to purchase livestock as an investment opportunity on behalf of investors. Reference was made in 10 Little Pigs promotional literature, website and correspondence, to a high level of proven returns. Such returns were stated to be based on previous years operations and shareholders profits and/or dividends in 2008 and 2009, notwithstanding the fact that 10 Little Pigs was only incorporated in March 2010.
Magic-Berries franchisees complained that despite the assertion that Mr Biggs had carried out extensive market research showing a certain level of average sales of the product, actual sales had fallen far short of those indicated.
As a result the stated predictions of income far exceed that which could be achieved. In addition:
No returns or refunds were paid to any of the investors despite repeated requests and complaints; and
Mr Biggs failed to cooperate fully with the investigation and, in particular, failed to maintain, preserve and/or deliver up adequate records for the companies despite requests.
Commenting on the case, David Hill, an Investigation Supervisor with The Insolvency Service said:
These companies took advantage of people hoping to get a start in business by becoming franchisees. At no time did they show any attempt to deliver on the wild claims they made.
Winding up these companies protects the public from being fleeced by such unscrupulous people and ensures that businesses thrive in a level playing field.
This should serve as a warning that The Insolvency Service is determined to take action to remove rogue companies from the business environment.