Creditors lose £12m from collapse of Urban Splash’s modular arm

The collapse of Urban Splash’s modular spin-off is set to leave creditors shortchanged by about £12.3m.

A mixture of contractors, engineers and local councils will not recoup what they are owed, after Urban Splash House collapsed in May.

In total, House owed about £20.8m to more than 70 companies. But administrator Teneo Financial Advisory Limited expects that selling off the company’s assets will provide the necessary funds to pay back its preferential creditors.

About £8.5m of assets have been noted in cash, money owed to the company itself, investments and stocks.

But the remaining £12.3m will not be recovered. Engineering firms Ramboll and Arup are among those that will not be paid what they were owed, to the tune of £43,000 and £64,000, respectively.

At the time of publication, Teneo had not responded to requests for comment on the reasons for the firm’s collapse.

The modular firm was spun out of the main Urban Splash company in 2019, when Japanese firm Sekisui took a 35 per cent stake in Urban Splash House Holdings.

According to Teneo, the group had 187 employees, with 151 working at the factory and most of the other staff at the development sites.

The administrators said in May that “unfortunately, 140 positions at Urban Splash Modular Ltd, and 20 of the 36 positions at Urban Splash Holdings Ltd, will be made redundant”.

The Japanese firm pumped millions into the modular firm over the past two years. It injected £18.5m into the UK operation in September 2021, and a further £11.5m was invested in January.

Administrations in the construction sector have ramped up in recent months, with more firms expected to go under in the months ahead, particularly those that are squeezed for cash.

Data from Creditsafe provided to Construction News showed a total of 31 firms went under in February, followed by 24 in March, 22 in April and 11 in May.

Experts have previously warned that although some companies may have avoided administration, they could be in the “stages preceding it”.

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