Ardmore directors are attempting to preserve the group’s remaining property businesses after seven companies launched company voluntary arrangement (CVA) proposals aimed at repaying creditors while allowing the businesses to continue trading.
The proposals, overseen by business recovery specialist BTG, cover Ardmore Group Holdings, Ardmore Group, Byrne Properties, Celebration Homes, Paddington Construction, Systemhaven and Byrne Estates (Kensal Green). If approved by creditors, the CVAs would allow the companies to repay outstanding debts according to an agreed timetable rather than being placed into administration alongside Ardmore’s main contracting businesses, which collapsed in June.
The latest move follows chairman Cormac Byrne’s decision to pursue an appeal against the High Court’s landmark Building Liability Order judgment concerning a £14.9m adjudication award secured by Crest Nicholson against Ardmore Construction Ltd, which is now in administration. The judgment makes the wider group companies liable for the sum and potentially opens the way for claims from other developers connected with historic Ardmore projects.
In June, the Court of Appeal granted Ardmore permission to appeal and agreed to fast-track the case because of its wider significance to the construction industry. Ardmore argues that the appeal will provide greater clarity over the circumstances in which Building Liability Orders can be made and the extent to which liabilities arising from historic projects can be imposed across companies within a wider group.
The outcome could have significant implications beyond Ardmore, particularly for construction groups that operate through multiple corporate entities. Building Liability Orders can allow liability for certain building safety-related obligations to be imposed on companies associated with the original contracting entity, making the issue of corporate structures and historic project liabilities an increasingly important consideration for developers, contractors and their advisers.
Against this backdrop, the proposed CVAs represent an attempt to preserve value within Ardmore’s remaining businesses while the legal challenge progresses. Rather than allowing the property companies to enter administration, the arrangements would provide creditors with an agreed mechanism for repayment while enabling the businesses to continue operating.
The proposals also mark another stage in the restructuring of a group whose construction operations have faced severe financial pressure. The collapse of Ardmore Construction and associated contracting businesses in June has left the wider group dealing with the consequences of significant liabilities, while the directors seek to separate the continuing property interests from the failed contracting operations.
A spokesperson for Ardmore said: “Our focus is now on preserving value in the wider Group, protecting the continuing businesses where possible, and pursuing the appeal against a judgment which we believe raises important questions for the wider industry.”
