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Administrator of House by Urban Splash modular home builder publishes findings.
Following the modular builder’s collapse, global advisory firm Teneo was appointed as administrator of House by Urban Splash, a joint venture between shareholders, Japanese modular firm Sekisui and Homes England, in May.
Collectively known as US House Group, the companies placed into administration are Urban Splash House Investments, Urban Splash House, Urban Splash Modular, Port Loop Holdings, Port Loop and Port Loop (Subco1).
The US House Group is a joint venture between individual shareholders who own 48 per cent of the equity, Sekisui House UK Ltd (SHUK) which owns 48 per cent of shares and Homes England who own the remaining 4 per cent of shares. The US House Group owns a number of development sites and a modular building factory in Alfreton.
At the time of Teneo’s appointment, the modular home buider had 189 employees, with 152 working at the factory with the majority of the remaining employees working at the development sites. However, following the administration appointments, the companies’ operations ceased with immediate effect and 164 employees were made redundant at the time.
Subject to its appointment a small number of employees were retained to assist the joint administrators in realising value from the companies’ assets.
A statement of administrator’s proposals report said the group identified a potential funding shortfall in early 2022, with the primary driver behind its funding shortfall being the “under-performance” of its modular factory facility, which had been making a loss for a “prolonged period”.
It said the underperformance of the modular home builder was attributed to under utilisation and an inability to absorb overhead costs, and design issues resulting in production defects and re-working the modular units, the costs of which could not be passed onto the developer.
The report said that after the funding shortfall was identified, it was clear that additional third party funding would be required to support the business in the short to medium term. The directors initially approached SHUK in their capacity as shareholder and secured creditor in PLL, to discuss a solution to the group’s financial difficulties and funding requirements.
While the group was able to implement a number of cost saving measures to ease the cash flow pressure in the immediate term and despite a period of discussions with SHUK, it was unable to secure the funding it required in the short to medium term.
Once it became clear that the companies were unable to pay their debts once they fell due, the directors of each of the companies held a board meeting on 9 May 2022, to consider placing the companies into administration.
A statement from Urban Splash at the time of the collapse said: “The appointment of Teneo senior managing directors Adrian Berry and Daniel Smith to the company has no impact on the wider Urban Splash group or its operations, which continue to run successfully.
“House is a joint venture between individual shareholders who own 48 per cent of the equity, Homes England which owns 4 per cent and Sekisui House UK Ltd, which owns the remaining 48 per cent shares.
“The administrators will oversee completion and sale strategies for the company’s developments.”
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