Brick by Brick needs £ 10million loan to avoid bankruptcy
BELIEF IN CRISIS: Consultants’ bailout for bankrupt homebuilder agreed, including council paying a second time for 190 apartments to be used as social housing. But the full extent of the potential losses is kept secret. By STEVEN DOWNES
Brick by Brick, the board-owned loss-making home builder, is to be wound up, a cabinet meeting agreed last night – but not before he receives another £ 10million loan so that the company that has goes bankrupt the borough can avoid going bankrupt itself.
And the board intends to buy 190 homes from the defaulting homebuilder – effectively paying for the properties a second time.
The board made its decision based on the advice of outside consultant Chris Buss, who has spent the past five months looking at the Brick by Brick books and looking for ways to extract value from the bankrupt company. for council taxpayers.
As Inside Croydon reported exclusively earlier this month, Buss and management consultants PwC calculated the Borough could lose at least £ 100million of the £ 226million owed by The Brick by The Brick outstanding loans and interest payments over the past six years.
It was the ‘risk’ that the £ 36million loan and interest repayments owed by The Brick this year will not materialize this was given as the main reason when the council issued a section 114 notice in November, admitting it could not balance its budget.
Chris Buss: reasonable
The final calculation, including the probable losses resulting from the liquidation of the company, was again kept secret last night, was only discussed last night in a secret item on the agenda of the ” Part B ”. Buss said some of the numbers were commercially confidential as the consultants continue to seek buyers for some or all of the company and its development sites.
Buss was able to tell listening advisers and observers of the government-appointed improvement council: “There is a lot more certainty about the numbers you have in front of you tonight than there was in the past. the Brick by Brick business plan last year. “
Over the past three months, Brick by Brick directors have been sacked from the board – although BxB CEO Colm Lacey has managed to keep his job – while the company has appointed a chief financial officer.
In his appearances before the Croydon committees this year, Buss has shown himself to be a huge fan of Wednesbury’s legal principle of reasonableness. Last night he cited Wednesbury again to stress the importance of funding The Brick by The Brick cash flow over the next eight months or so.
The council hopes the College Green site, with a building permit and only 16% affordable housing, will be purchased by a commercial developer
It would be considered “reasonable,” Buss said, “to protect as much as the board can from his investment.” The value of Brick by Brick lies in still unfinished and unsold homes and apartments.
“If we don’t make this loan,” Buss said, “the business could go bankrupt and all that value would be lost.”
According to council figures, there are 931 homes under construction by Brick by Brick.
Among the liquidation measures, the council will buy up to 190 homes from Brick By Brick using its housing income account. Having loaned out so much money to The Brick by The Brick, and not yet having received a dime in loan repayment, interest or profit, this effectively means that the board will pay for these properties a second time. The cost of these apartments could be around £ 50million.
The decision on whether or not to sell the business to a commercial developer will be made by May. Buss has indicated that there is at least one interested buyer.
The council will also market the College Green site adjacent to Fairfield Halls. It received a building permit in April 2020 for more than 420 housing units, shops and community facilities.
Hamida Ali approves purchase of Brick by Brick homes
In a statement released today, the council said: “There is a wide range of sites that will not be developed by Brick By Brick now, and the council will decide what to do with each site based on the best option for taxpayers. local.
“It will either be by the board that develops the sites itself using money from the housing income account, selling to other developers, or keeping the sites.”
According to Hamida Ali, the head of the council, “Resolving the future of Brick By Brick and its development projects so that they bring maximum benefit and minimum risk to local taxpayers” is essential to restore the finances of the city. advice.
“Our goal now is to ensure that the sites currently underway are completed by this fall so that Brick By Brick pays the money owed to council and more locals on our waiting list for housing can get it. a much needed home, ”Ali said.
“We also plan to purchase up to 190 homes at Brick By Brick using part of our housing budget – this is important because it would mean that even more local residents could access truly affordable housing.”
Read more: Council set to hit £ 100million as it ends Brick by Brick
Read more: Brick by Brick paid nothing to the board
Read more: “An accountant could have predicted this over a year ago”
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