Three people have been banned as company directors after they misled investors who paid more than £4m into a city centre student accommodation development.  

Fraser MacDonald was a director of Prosperity Cathedral View Development Ltd which was behind The Croft development in Derby before the company went into administration in 2020. 

He was also a director of Prosperity Cathedral View NMPI Ltd, a company used as a fundraising vehicle to attract investors for the development. 

In his role as Investor Relations Director, MacDonald allowed 42 investors to be misled when they entered into loan agreements with Prosperity Cathedral View NMPI worth a combined £4.13 million. 

They thought their money would go into the Derby development, but instead more than £2 million was transferred to a connected company. 

MacDonald, of Glossop in Derbyshire, has been disqualified as a company director for seven years, until February 2032.

The companies’ chief executive Gavin Barry, and chief operating officer Edward Fowkes, were both also disqualified as directors in 2021 for their roles in causing or allowing the investors to be misled in 2019. 

Ann Oliver, chief investigator at the Insolvency Service, says: “Fraser MacDonald, Gavin Barry and Edward Fowkes allowed the continued promotion of an investment offer which was misleading to investors. 

“Significant sums of money were invested by people who thought they had more security over their investments than they actually did. 

“We also uncovered evidence that the three directors did not use all the funds borrowed for financing the development at The Croft development as they had promised.”

MacDonald has now been removed from the corporate arena until January 2032 and joins Barry and Fowkes in being barred from running, managing or promoting a company without permission of the court.

A total of 44 investments were made by 42 high net worth investors in the Derby scheme between January and July 2019. The highest individual investment during that period was £504,000. 

Investors were promised that their funds would only be used for The Croft development and that they would be second in line for repayment behind other high value investors. 

However, Prosperity Cathedral View Development had also entered into loan agreements worth £13.7m and £2.5m with commercial lenders in January 2019 which had the highest priority for repayment. 

This meant that the investments made through Prosperity Cathedral View NMPI were only third in line for repayment, not second as the investors were led to believe. 

In total, more money was raised for The Croft development than was needed, with just over £2m of investors’ money transferred to a connected company. 

Prosperity Cathedral View Development entered administration in May 2020 with liabilities of more than £29m. Prosperity Cathedral View NMPI went into administration in August of that year with liabilities of more than £11m  and no assets. 

Administrators sold The Croft for more than £18m in March 2021 with the priority lender being repaid in full and the second commercial lender being partially repaid. However, no money was returned to the 42 investors. 

The Secretary of State for Business and Trade accepted a disqualification undertaking from MacDonald, and his ban started on Tuesday February 4.  Barry, of Boyd Avenue, Dublin, and Fowkes, of Bramalea Close, London, both signed seven-year disqualification undertakings which began in December 2021. 

The undertakings prevent them from being involved in the promotion, formation or management of a company, without the permission of the court. 

A financial settlement has also been reached between MacDonald and the liquidators of Prosperity Cathedral View NMPI.