Creditors of HAB Land rejected rescue plans and voted to put the company and two related entities into voluntary liquidation on Tuesday.
Just under 300 small investors put in an average around £8,000 through minibonds, almost all of which will now be lost.
Simon Bullock, one of HAB Land’s Directors said just 22 per cent of HAB Land minibond holders had voted for plans to raise additional finance, leaving no choice but to liquidate the company.
James Bennett of KPMG, who is handling the process, said delays and higher costs on HAB Land’s building projects had resulted in “significant” cash-flow problems.
“After being unable to raise further finance or renegotiate existing liabilities, the directors took the difficult decision to instigate liquidation proceedings,” said Mr Bennett.
“This has resulted in a considerable loss to minibond holders who largely financed the project.”
KPMG said it will investigate the events leading up to the companies’ insolvency. HAB Land and HAB Housing raised £2.4m through a minibond in January 2017 offering returns of 7 per cent to 9 per cent.
HAB Land Limited was founded in 2014 to acquire development land for building projects at sites in Oxford and Winchester.
Many investors said they felt “angry and betrayed” after they were told in August that they could lose up to 97 per cent of their money.
A letter at the time stated that “after final completion of the projects at both Kings Worthy and Cumnor Hill [in Oxford], the net return available to bondholders would be expected to range from £606,000 (best case) to £69,000 (worse case) which, in each case, is equivalent to 26 pence and 3 pence for every £1 of bond monies invested”.
None of the homeowners on the two developments are directly impacted by Wednesday’s announcement, but an HAB Land spokesperson said “the situation remains fluid and under review”.
The spokesperson added: “This has meant that there is, what we hope to be, a temporary pause on the remaining works on the sites.
“We continue to explore all options to enable these sites to be fully completed.”