Cost overruns sink Grand Design housing funders
17 Oct 2019
Liquidators from KPMG have been appointed to a clutch of companies within the property group founded by Kevin McCloud, presenter of the TV refurbishment show Grand Designs, which have failed following project and cost overruns
17 Oct 2019
James Bennett and David Standish from KPMG have been appointed joint liquidators of BAH Restructuring Ltd, HAB Land Ltd and HAB Land Finance plc.
HAB Land Ltd was founded in 2014 to acquire development land for building projects at sites in Oxford and Winchester. HAB Land Finance plc was subsequently incorporated as a wholly owned subsidiary of the company in 2016, in order to raise finance to fund the real estate activities of HAB Land through mini bond instruments.
The companies form part of the ‘Happiness Architecture Beauty’ housing business set up by TV presenter Kevin McCloud in 2007, with a mission to ‘challenge the way identikit volume housing was built in the UK’. Investors were invited to put money into eco-friendly development projects, with projected returns of some 8% a year over a five-year period.
McCloud resigned as a director of HAB Land and HAB Land Finance in February 2018.
In March 2019, following a period of difficult trading, the directors of HAB Land undertook a comprehensive review which led to the conclusion that they may not be in a position to repay the full amounts advanced from HAB Land Finance. Subsequently, the directors wrote to the bondholders of HAB Land Finance setting out the position and putting forward proposals in order to repay them, which are believed to have included restructuring the bonds so there were no payments until 2024. These plans were rejected by the bondholders.
A meeting of the company’s board of directors subsequently took place on 25 September where it was resolved that the company was insolvent and should be wound up voluntarily. This was followed by a meeting of the company’s creditors in October at which a vote was passed to place the company into creditors’ voluntary liquidation.
Simon Bullock, a director of HAB Land, said: ‘It is with regret that we have come to this decision. With only 22% of the mini-bond holders voting for the resolution and having exhausted all other options we were left with no alternative.’
James Bennett, KPMG director and joint liquidator, said: ‘The directors have reported that higher than anticipated design and project management costs, coupled with delays to the delivery of the sites, resulted in the companies experiencing significant liquidity issues.
‘After being unable to raise further finance or renegotiate existing liabilities, the directors took the difficult decision to instigate liquidation proceedings.
‘This has resulted in a considerable loss to mini bond holders who largely financed the project. An important element of the liquidators’ role, as usual, will be to review the events leading up to the failure of the companies.’
KPMG has made clear, that for the avoidance of doubt, both of the building projects in Oxford and Winchester are controlled by two subsidiary companies, HAB at Lovedon Fields Ltd and HAB at The Acre Ltd, neither of which are part of the proposed liquidation. The directors of these entities continue to explore options to enable these developments to be completed.
HAB Housing Ltd, of which McCloud remains a director, is also unaffected by the liquidation proceedings.
By Pat Sweet