Administrators report directors behind ‘ghost’ flats
THE directors of the company that developed Plymouth’s “ghost” block of student flats have been reported to the Government and could end up banned from running another firm.
Administrators dealing with the collapse of Plymouth (Notte Street) Ltd have been probing the company’s affairs after it went bust leaving more than £25 million of debts unpaid.
They have now submitted a confidential report on the directors’ conduct to the disqualification unit of the Department for Business, Energy and Industrial Strategy. It comes as the administrators at business consultants BDO LLP prepare to dissolve Plymouth (Notte Street) Ltd three years after it went into administration.
The company developed the Crescent Point double block of student apartments, in Notte Street. They were supposed to open in September 2018 but never got to welcome students and ended up being sold for a knockdown price to another company, which opened them this autumn under the name Saltwater Place.
Now BDO is winding up the administration and confirmed it had carried out an investigation into the insolvency. In a final report on the administration, it said: “The joint administrators have completed a review of the company’s affairs and have submitted a confidential statutory report on the conduct of the directors to the disqualification unit of the Department for Business, Energy and Industrial Strategy.”
The disqualification unit, part of the Insolvency Service, considers referrals from insolvency practitioners on whether to commence disqualification proceedings to prevent unfit persons acting as company directors.
It can order that people be disqualified from acting as company directors. Administrators must report on the conduct of directors under the Company Directors Disqualification Act 1986. The BDO report also confirms that the towers were sold to an unnamed buyer in February 2022.
Guernsey-based lender ICG, which financed the cost of building the towers, received a total of £10,927,225 from the sale – but the secured creditor was owed £28,115,046, plus interest. Meanwhile, unsecured creditors claimed £7,848,568 but will receive nothing, after the BDO report revealed that “a dividend was not paid to unsecured creditors as there have been insufficient realisations... to enable a dividend to be paid.”
The building had sat empty for years after Plymouth (Notte Street) Ltd began High Court proceedings against a number of parties in respect of “alleged defects in the development of the property”, including some of the rooms being built too small.
The legal row, now over, between companies meant the flats could not open on completion of the building in September 2018. Freehold-owner Plymouth (Notte Street) Ltd, part of the London-based Harouni Group, then went into administration in November 2019 and a month later Crescent Point was valued at £30 million – based on the assumption it was fully occupied at the going market rent when sold as a going concern.
However, the building required millions of pounds of remedial work when defects came to light, after BDO brought in commercial property experts at JLL to give Crescent Point a thorough inspection before it could be marketed.