A team of professionals has ensured the successful redevelopment of a failed student accommodation development in order to get it back on track.
With multiple investors across the world, the part-built development of 273 self-contained flats in Newcastle Under Lyme, was set to provide accommodation to Keele University students from September 2017, but construction work stalled earlier that year. The project has since remained in a state of stalemate with no funding available to enable its completion.
James Fish and Craig Johns of Cowgills Business Recovery were appointed as joint administrators on 5 February 2021 to handle the property known as “Sky Building”. They were tasked with achieving the best possible return for the investors. Mark Hague of Farleys was instructed by the administrators to lead on the legal aspects of the project.
James Fish explains: “We obtained a valuation of the site and, following a period of marketing, we received an offer that was capable of being recommended for acceptance by our appointed agents, Landwood Group. However, before proceeding with the sale we afforded the investors the opportunity to explore the possibility of buying the site back and raising the required funding to complete the build out themselves. Unfortunately, the investors were not able to raise sufficient funding to acquire the site and with pressure increasing from the local council to find a solution, the joint administrators decided to accept a sale to a third party which would provide a cash return to certain creditors.”
As the investors had equitable liens over the property, the joint administrators were required to obtain the Court’s sanction for the proposed sale at £2.15m, which was obtained on 14 October 2021, in an order made by His Honour Judge Halliwell and the sale of the property was completed on 9 December 2021, to Built 4 Learning Limited.
Due to the aforementioned issues with registered interests in the property, the question of how the funds held by the joint administrators are to be distributed has been referred back to the Courts. This will be heard on 4 March 2022 again by His Honour Judge Halliwell, due to the complexity of the matter.
Once the order has been made, the joint administrators will be able to distribute the sale proceeds to those investors that the Court directs appropriate to pay.
Mark Hague, Associate Partner at Farleys said: “This has been a challenging and complex project that has required input from a substantial number of professionals to achieve the result we have for the investors.
The multi-specialist team has enabled an outcome that will see investors receive substantial returns from a situation that they did not anticipate receiving anything back at all.
Added James: “We are pleased with the realisations achieved for this asset, which are significantly higher than our agents’ expectations. This project has not been without its challenges, due mainly to the practical issues surrounding the general condition of the site, which had been exposed to the elements and was causing concerns to the local authority, whilst also requiring ongoing on-site security arrangements. These issues, together with the sheer number of individual investors involved in the project and what they wanted to see achieved have all meant that this matter has required the ongoing involvement of the Court on more than one occasion.”
The joint administrators also instructed Claire Bunbury, Counsel of 23 Essex Street Chambers throughout.
Farleys has a team of corporate recovery specialists on hand to assist business owners and investors with the legal aspects of corporate finance and insolvency matters. For confidential advice, please call 0845 287 0939 or contact the team by email.