Hope for creditors as Urban Splash House insolvency moves to new phase

Failed industry disruptor Urban Splash House is to go into liquidation, more than two years after collapsing into administration.

The move marks the final step in the winding-up of the modular-build specialist, and could bring certain suppliers closer to receiving some of the cash they are owed.

Spun out of Manchester-based developer Urban Splash, the company was backed with investment and high hopes by Japanese giant Sekisui and affordable-housing government body Homes England.

The firm delivered residences across the UK, but in its most recent accounts it reported a £3.7m pre-tax loss for the year to September 2020 against revenue of just £4.7m.

Administrators from Teneo Financial Advisory took control of the business in May 2022, stating an intention to achieve “a better result for creditors as a whole than in liquidation”.

A year later, this process was extended until this month, when Teneo declared its intention to move Urban Splash House into a creditors’ voluntary liquidation (CVL) process.

Julie Palmer, managing partner of financial advisory firm Begbies Traynor, said this was “not unusual” in the construction sector. The move into CVL could enable a focus on “distribution to unsecured creditors”, she told Construction News, although it was unclear how long this might take.

In a report filed with Companies House last week, Teneo says there are no secured creditors across the two companies technically in administration, Urban Splash House Ltd and holding company Urban Splash House Holdings Ltd.

There are no preferential creditors for Urban Splash House Ltd. The report says there are sufficient funds to fully repay claims against Urban Splash House Holdings Ltd.

Teneo said that a surplus of £4.3m is “available for unsecured creditors”. However, total claims so far amount to more than £25m.

“We are unable to provide an estimate [of returns] until the quantum of unsecured creditor claims has been established and asset realisations are completed,” the report notes.

At the time that it fell into administration, Urban Splash House was a joint venture, with Urban Splash shareholders owning 48 per cent of the business, Sekisui 48 per cent and Homes England 4 per cent.

Operating issues related to the modular firm’s factory in Alfreton were blamed for the collapse of the business.

Housing minister Lee Rowley last month pledged to undertake “detailed work” with modular builders over the coming weeks following a string of setbacks in the sector.

It emerged in April that modular homebuilder TopHat had stopped work on a 60,000 square metre manufacturing site in the South Midlands, citing “market conditions”.

Meanwhile, Beattie Passive, which created the UK’s first Passivhaus-certified build system, halted work at its 10,800 square metre factory after parent company Beattie Passive Group Ltd and four related companies filed notices of intention to appoint an administrator.

Laing O’Rourke said in January that it was considering cutting 60 jobs at its offsite factory, in a bid to reduce operating costs.

Several offsite specialists have collapsed in recent years, including Ilke Homes, Mid Group, Eco Modular Buildings and Caledonian Modular. L&G also wound down its offsite business after years of heavy losses.

The House of Lords Built Environment Committee warned in January that it had “limited confidence” that the government had a coherent strategy for modular construction.

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