Three company directors have been disqualified after a failed student accommodation scheme in Derby cost 42 high-net-worth investors a total of £4 million.
The Croft development, promoted by Prosperity Cathedral View Development Ltd, entered administration in 2020, with investors ultimately recouping nothing.
Fraser MacDonald, formerly Investor Relations Director at Prosperity Cathedral View NMPI Ltd, was found to have allowed 42 investors to sign loan agreements worth £4.13 million under the understanding that the funds would be used solely for the Derby project. Instead, more than £2 million was diverted to a connected firm. MacDonald is now disqualified as a director for seven years—joining chief executive Gavin Barry and chief operating officer Edward Fowkes, who were each banned in 2021.
The Insolvency Service concluded that the three directors had misled investors on the security of their loans and secured more capital than required for the development. Surplus funds were diverted elsewhere, leaving the Derby project underfunded.
Prosperity Cathedral View Development collapsed in May 2020, with liabilities surpassing £29 million, while Prosperity Cathedral View NMPI followed suit in August with a further £11 million in liabilities. Although The Croft site was eventually sold for over £18 million, original investors saw none of the proceeds as higher-ranking lenders took priority over the returns.
Ann Oliver, Chief Investigator at the Insolvency Service, said: “Significant sums were invested by individuals who were misled about the level of security attached to their loans. We also found not all the funds raised were actually used to build The Croft development as they had promised.”
Under the terms of his disqualification, effective until January 2032, MacDonald cannot form, promote or manage any business without prior court approval. Barry and Fowkes face similar restrictions until December 2028. MacDonald has also reached a financial settlement with the liquidators of Prosperity Cathedral View NMPI.
