Investment Risk Analysis: LINMARI GROUP LIMITED

1. Risk Rating: HIGH

The company is currently in liquidation, has been chronically insolvent throughout its existence, and presents severe solvency and liquidity concerns. This is a distressed entity with no realistic prospect of recovery.

2. Key Concerns

Concern 1: Formal Insolvency Status

The company's status is recorded as "Liquidation." The registered address has been moved to FRP Advisory Trading Limited, a well-known insolvency practice based in Preston. This confirms the company is under formal insolvency proceedings. All investment consideration should be viewed through this lens — the company is not a going concern.

Concern 2: Chronic and Deteriorating Insolvency

The company has carried negative net assets since incorporation in 2015, with a steadily worsening trajectory:

The company has never been solvent. Shareholders' funds have deteriorated from (£5,121) to (£180,325) over six years, indicating persistent operating losses or write-downs.

Concern 3: Severe Liquidity Crisis and Questionable Balance Sheet Composition

As at 31 October 2021: - Cash: £1,717 against current liabilities of £917,248 - Current ratio: 0.85x — already below the critical 1.0x threshold - Net current liabilities: (£140,225)

More critically, £765,036 of the £777,023 total assets (98.5%) is held in stock, which has remained unchanged between 2020 and 2021. For a company with zero employees, no reported turnover in the filed accounts, and SIC code 70100 (Activities of head offices), this stock figure raises significant questions about valuation, realizability, and whether this represents a genuine trading asset or an overvalued/inflated balance sheet item. If the stock proves impaired, the true insolvency position would be catastrophic.

3. Positive Indicators

There are very limited positive indicators for this entity:

• Creditor Composition: The largest creditor (£898,681 classified as "other creditors") likely represents related-party debt (director or intercompany loans). If this debt is subordinated or forgiven, it could reduce the apparent insolvency, though this would not address the fundamental lack of trading viability.
• Historical Creditor Patience: Creditors have tolerated the insolvent position for several years without forcing earlier liquidation, suggesting some debts may be related party in nature and not immediately callable.
• Minimal Bank Debt: Bank borrowings are relatively modest at £50,000 total (£10,000 current + £40,000 long-term), limiting secured creditor exposure.

4. Due Diligence Notes

Urgent Investigations Required:

1. Nature and Valuation of Stock: The £765,036 stock figure requires immediate scrutiny. What does this stock comprise? Is it obsolete, impaired, or subject to prior charges? For a head office operation with no employees, this is highly unusual. Obtain the liquidator's assessment of realizable value.

2. Related Party Creditor Analysis: "Other creditors" of £898,681 represent the dominant liability. Determine what portion constitutes director loans, intercompany balances, or connected party debts. This is critical for understanding the liquidation waterfall and whether any preferential or connected-party claims exist.

3. Director Conduct: Investigate Mr Gary Howard's director history, including: - Other directorships (current and former) - Any disqualification proceedings - Whether related-party transactions were conducted at arm's length - Whether the company traded whilst insolvent, given the chronic negative net asset position

4. Liquidation Details: Obtain the liquidator's statement of proposals, estimated realization timeline, and likely return to creditors. Determine whether this is a creditors' voluntary liquidation or compulsory winding up, and the estimated deficiency.

5. Filing Delinquency: Both accounts and confirmation statements are overdue. While the liquidation may explain this, verify whether the liquidator has assumed responsibility for statutory filings.

6. Tax Liability: £8,567 owed to HMRC for taxation and social security — verify whether this has been paid or whether HMRC has lodged a claim in the liquidation.

7. Historical Trading Activity: The absence of an income statement (permitted under small company regime) makes it impossible to assess turnover, cost of sales, or operating margins. Investigate whether the company ever generated meaningful revenue, or whether it functioned primarily as a holding or financing vehicle.