EXCLUSIVE: Godwin Capital Investors Facing Huge Losses After Company Collapse

Thousands of small-time investors who put more than £160M combined into companies run by property firm Godwin Capital have been told they will recover a “minimal” amount of their capital after the companies collapsed into administration earlier this year. 

At a meeting held Thursday by administrators to several Godwin Capital companies, creditors were told that only around £5M of assets that could be used to repay them had so far been identified, Bisnow has learned. 

Godwin Capital didn't invest the money the way it told investors it would, according to a report from administrators filed Friday at Companies House and obtained by Bisnow.

Rather than being used to buy and build assets, the notes Godwin sold were used to repay other investors and pay for working capital of other Godwin companies, according to the administrators' report.

It is now unclear how much of the investors' money will be recovered. The largest company in administration raised £155M, but administrators wrote this week that it has £1,214.81 in its bank account. 

“The realisable value of these unsecured loans remains uncertain at this stage, as it is not yet clear which [entities] within the Group hold physical properties and what recoveries may be possible in this regard,” MHA's Andrew Duncan and Steven Illes wrote in the report.

“However, at this stage, it would appear that recoveries from these assets will be minimal as against the quantum of the funds loaned to the operating companies and SPVs and this matter will require significant further investigation.”

The £5M figure could rise, but that is the extent of the recoverable assets the administrators have identified so far. 

Duncan and Illes were appointed in June over several companies within the Godwin Group, a Birmingham-based developer and investor. 

One part of Godwin, called Godwin Capital, raised money from small-time investors, who invested sums from £5K upward. Financial advisers in the UK, U.S. and United Arab Emirates would advertise the sale of loan notes, a kind of bond, to individual investors with fixed-interest payments ranging from 8% to 12%. 

A security trustee managed the investments on behalf of bondholders. The loan notes were supposed to be repaid after two years. 

The largest Godwin Capital company, Godwin Capital No 8, raised £155M from investors, the administrators report showed, while another three companies raised about £7M. Overall, money was raised from more than 2,500 investors. 

The funds were lent to other special purpose vehicles in the Godwin group of companies, administrators found. The information memorandums used to sell the notes to investors said their money would be secured by property assets and development sites, the income and capital from which would be used to pay their interest and repay their investment when it matured.

But MHA found investors' money was instead advanced to other Godwin SPVs in the form of unsecured loans. That means that even if an SPV owned a property asset, the investors don’t have any security over it. Even if it is sold, they will only get any money back once secured creditors like other lenders or HMRC have been repaid. 

At least four of the SPVs to which investor money was transferred have other lenders that will be repaid first if any assets are sold, the MHA report says.

The money raised from investors in Godwin Capital No 8 was also used to repay other investors and fund working capital of other Godwin Group companies, the report says. 

“Funds also appear to have been loaned to enable repayments of loan notes issued by other Godwin capital raising companies (approx. £24m), lent directly to SPVs for various proposed developments or to operating companies within the Godwin Group for working capital and then subsequently advanced to SPVs for various proposed developments,” the report says. “We do not yet have full visibility on these loans, how the funds were utilised or the prospects of recovery.”

In an outline of the actions they had undertaken so far, the administrators said they had begun a review of the transactions to try to follow the money and find out how it was spent, but they weren't ready to draw any conclusions.

“We are still gathering information and attempting to determine the reasons for failure of the Godwin Group, the utilisation of funds, what possible recoveries are available and into the actions of the Company’s directors,” the administrators wrote. “We do not propose to comment further on this at this stage as we do not wish to prejudice any future actions.”

Last year, Godwin contacted investors in Godwin Capital No 8 and asked if the payment of interest could be delayed and the maturity date of the loan pushed out by 12 months. 

An email sent to investors in September 2024 said that while the company had 30 profitable sites across the UK, revenues had been slower to grow than the company had expected due to economic headwinds like rising interest rates.

The loan note maturity date was being extended to allow new developments to be completed and the interest rolled up to “ease cashflow pressure,” the email said. 

While investors agreed to that, one of the group’s key investment introducers — the intermediaries that advertised the loan notes to investors — announced its intention to pause further activity until the company returned to its standard two-year redemption cycle, the MHA report says. 

“Around the same time, the company experienced a default event, which triggered wider concern among investors regarding the group’s solvency,” Duncan and Illes wrote.

Then, in June, the security trustee that acted on behalf of loan note investors appointed MHA as administrator. 

Groups of creditors have formed organisations to try and work together and increase their chances of getting as much money back as possible. Information can be found here and here. 

MHA has also been appointed liquidator to several of the group companies to which Godwin Capital lent money in order to take control of any assets they might have. This includes Godwin Developments Ltd, to which £26M was lent, and Godwin CS No 1 Ltd, to which £58M was lent. 

The report says that MHA is likely to be appointed liquidator to other Godwin companies to try and recover further assets. 

“There are over 100 companies in the wider Godwin Group and this is a very complex matter,” the administrators wrote.