Urban Splash modular business owes more than £20m

Modular housebuilding joint venture Urban Splash House fell into administration with debts of more than £20m to suppliers and backers, according to documents filed by its administrators at Companies House.

The business, a joint venture between Manchester-based regeneration developer Urban Splash, Japanese modular giant Sekisui House and Homes England, dramatically collapsed into administration last month following what the administrator described as “operational issues” at the firm.

According to a Statement of Affairs filed by the administrator for Urban Splash House Holdings Ltd, at which Housing Today understand the accounts of seven group companies all now in administration were previously consolidated, the firm owes £8.3m to its backers and the supply chain, and a further £9.9k to staff.

The bulk of the £8.3m debt comes in the form of a £7.65m “term loan” from one of Urban Splash House’s joint venture partners, Sekisui House, the document states

However, the statements of all of the group companies added together contain debts of £20.8m, to a wide range of external suppliers. In none of the individual businesses do the administrators estimate that the value of the assets likely to be recovered will be enough to pay back creditors.

The statement for Urban Splash House Holdings said that while the “book value” of the firm’s assets was £32.7m while it was a going concern, it estimated that in administration it will only be able to realise £4.1m from those assets, which, given its £8.2m debt, is likely to leave many of the firm’s creditors out of pocket.

Both Urban Splash and the administrator, Teneo, declined to comment at all on the documents, or what their implication were for creditors.

The Urban Splash House group of companies were put into administration on May 11, despite Sekisui having last October agreed a £130m funding package for the firm, which was trumpeted in the last year’s accounts.

At the time the business, which had reported a £13m loss for the year to September 2020, said that an initial £7.5m loan from the £130m package had been agreed, and that the money would allow the business “to grow significantly in the coming years”.

The business, which was 48% owned by Sekisui, 48% by individual shareholders - including Urban Splash directors and others - and 4% by Homes England, had been seen as an important venture for the growth of the modular housebuilding industry, linking together one of the UK’s most innovative regeneration developers with the world’s most experienced modular housebuilder.

>> See also: Growing pains or cause of concern? What do recent failure mean for the modular housebuilding market? 

The joint venture, set up in 2019, had won roles to deliver homes at the Port Loop scheme in Birmingham, Northstowe in Cambridgeshire, Wirral Waters in Merseyside and New Islington in Manchester.

Teneo Financial Advisory Limited were appointed as joint administrators (“Administrators”) of Urban Splash House Holdings Ltd, Urban Splash House Investments Ltd, Urban Splash House Ltd, Urban Splash Modular Ltd, Port Loop Holdings Ltd, Port Loop Ltd and Port Loop (Subco1) Ltd.

Teneo said in May that 160 of 187 jobs across the group would be made immediately redundant.

At the time Adrian Berry, joint administrator, said he was looking to stabilise the US House Group and complete certain developments, while exploring sale options for the factory and the other development sites, but today declined to give an update on progress.