Failed SPV Structuring Advice in £4m Property Investment Dispute

Two Middle Eastern investors have brought a professional negligence claim exceeding £4 million against their former solicitors following the collapse of a UK property investment.

The claim arises from the proposed acquisition of a mixed‑use building in Hull, intended to be held as a long‑term investment. The transaction was restructured from a direct property purchase into the acquisition of the sole share in a special purpose vehicle (‘SPV’) holding the lease, allegedly on the basis that this would provide tax advantages. The Claimants contend that they were not properly advised on the risks of this structure.

Under the share purchase agreement, substantial deposits were required to be paid in advance, with no effective protection in the event of non‑completion, seller insolvency, or failure to carry out refurbishment works.

By late 2020, more than £4 million had been advanced, including significant sums paid towards renovation works despite the absence of adequate security, a robust building contract, or guaranteed funding arrangements.

The Claimants allege that the Defendants failed to advise on the risks of the transaction, failed to secure appropriate contractual protections and permitted further payments to be made even as the seller’s financial position deteriorated.

Following the death of the Claimants’ sister and undisclosed changes to the ownership of the SPV, the seller treated the agreement as terminated, forfeiting the deposits before entering insolvency. Only a small fraction of the investment was recovered.

Temple issued an ATE policy to support the claim, protecting the claimants against adverse costs exposure while the matter proceeds.

The Temple Perspective

Professional negligence claims arising from transactional and corporate structuring advice frequently involve detailed analysis of documentation, risk allocation and causation. Early access to ATE insurance can provide reassurance to claimants facing substantial losses and support the pursuit of complex, document-heavy claims.

Matter value: £4,000,000.

Case status:  ATE insurance policy issued, case ongoing.