A report into a property company behind a stalled development on the edge of Liverpool city centre has revealed that buyers are owed £3,915,776.
Last October the ECHO reported that the Metalworks scheme off Leeds Street had not been developed, and that the site had become a haven for flytippers.
The scheme, which was first unveiled several years ago, promised 300 new apartments on the site of the former Lawtons building.
Now the Pumpfields Regeneration Company (PRC) , the firm behind the Metalworks scheme, has collapsed into administration.
A report by administrators Smith and Williamson LLP has revealed that PRC owes £7.7m to creditors, including £3, 915,776 to investors in the scheme.
The report, written earlier this month and now public, also reveals that 77 buyers have invested in the Metalworks scheme, which has not been built. It reads: "The company has raised funds through agreements for the pre-sale of 95 apartments to various parties and a total of £3,935,364 was received by the company in respect of these pre-sale agreements.
"UN1s ( unilateral notices granted to buyers of apartments) have been registered against the Metalworks registered title by 77 pre-sale creditors."
The report also reveals PRC owes £3,050,000 to finance company MoneyThing, who brought about the administration. MoneyThing, who facilitated crowdfunding, entered into administration last December.
PRC used a loan of £2.5m to buy the Metalworks site, but then later defaulted on the loan repayments.
It reads: "In order to fund the purchase of the Metalworks site the company obtained a loan facility in the amount of £2.5m for a 12 -month term from MoneyThing in May 2017. The loan was secured by way of a fixed and floating charge over the company's assets, including the Metalworks.
"Despite a number of extensions granted, the loan defaulted and the loan balance currently stands at £3.05m."
The report also questions a statement of affairs (SOA) by PRC director Daniel Johnson, in which he claims the sale of the land will be used to repay the money owed to MoneyThing, who have the first legal charge (a type of mortgage) on the site.
The report reads: "The company director has estimated in his SOA (statement of affairs) that the Metalworks will be disposed of for a net amount of £2m and has shown that this will lead to a deficiency as regards MoneyThing of £1.05m.
"We note that the company director has estimated in his SOA that there will be no surplus from the sale of the property available to pay a distribution to Metalworks Buyer, however, he has also, in contradiction, estimated in his SOA that those who have agreements to purchase apartments and who he shows as being owed £3.9m will be repaid in full.
"Clearly, if the company director is correct, there will be no distribution to Metalwork buyers from the proceeds of the sale of the Metalworks."
In particular the report challenges the director's claim that there will be money available to recompense buyers.
It reads: "As the director has estimated that the value of the property will only settle £2m of the £3.05m owed to MoneyThing, it is not clear why the director has made the extraordinary assumption that the company will be able to settle in full the amounts owed to prospective purchasers of apartments, given his estimate of a £1.05m shortfall owed to MoneyThing."
The report suggests that money will not be available to repay buyers. It reads: "It is yet to be determined whether any distribution will be payable to Metalwork buyers under its legal charge with second ranking priority."
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And the same reports reveals that administrators are now "investigating" the PRC in relation to the use of buyers' funds, given that the site has clearly not been developed.
It reads: "The administrators are investigating the company's usage of these funds raised, particularly in light of the limited development works which were completed by the company, as part of their investigations into the causes of the company's insolvency."
A spokesman for Mr Johnson told the ECHO that he bought PRC after the company had already taken deposits from buyers. Companies House records show that Mr Johnson joined PRC as a director in February last year.
The report also reveals that PRC has other debtors including £591,834.25 owed to trade creditors.
The Metalworks scheme was previously promoted by sales agents Acentus Real Estate Ltd. In 2019 Simon Clarke, from Acentus, said to the ECHO: "This scheme is in a fantastic location, in a premium L3 postcode. It’s on the cusp of where all the regeneration is going on. You’ve got 10 Streets, Liverpool Waters and the Pumpfields Regeneration area.
“It stands out because it’s also on the access road on the exit of the city – up to the football stadiums, and easy access to the city centre and Lime Street Station."
Mr Clarke, who left Acentus in June 2019, has said that he acted on information provided by the PRC. When contacted earlier this week Mr Clarke said that he was never a director or employee of PRC.
The administrators have said they will release an update in a progress report later this year.