Creditors lose £12m as Urban Splash modular arm collapses

The collapse of the Urban Splash modular spin-off is expected to leave creditors harmed around £12.3m.

A mix of contractors, engineers and local councils will not get their due after Urban Splash House collapsed in May.

In total, House owed around £20.8million to more than 70 companies. But administrator Teneo Financial Advisory Limited expects the sale of the company’s assets to provide the funds needed to repay its secured creditors.

Around £8.5m of assets were noted in cash, money due to the company itself, investments and shares.

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

At press time, Teneo had not responded to requests for comment on why the company collapsed.

The modular company was spun off from the main company Urban Splash in 2019, when Japanese company Sekisui took a 35% 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 employees at the development sites.

The directors 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 company has pumped millions into the modular enterprise over the past two years. It injected £18.5million into the UK operation in September 2021, with a further £11.5million being invested in January.

Administrations in the construction sector have intensified in recent months, and more companies are expected to fail in the coming months, especially those that are cash-strapped.

Creditsafe data provided to Building News showed that a total of 31 companies went bankrupt in February, followed by 24 in March, 22 in April and 11 in May.

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

Alice F. Ponder