14 July 2022 · By Will Ing
Source: House by Urban Splash
Administrators for House by Urban Splash have said its modular factory was loss-making for several months due to ‘underutilisation’ and ‘design issues resulting in production defects’
The prefabrication specialist collapsed in May, owing more than £19 million to suppliers and leaving 160 staff redundant. The business was set up in 2018 and centred around its Derbyshire modular factory. It was co-owned by Urban Splash shareholders, Sekesui House UK and Homes England.
A statement of administrator’s proposal published last week says the business failure was caused by ‘the under-performance of its modular facility, which has been loss-making for a prolonged period’, adding that directors had ‘identified a potential funding shortfall in early 2022’.
Joint administrators Adrian Berry and Daniel Smith of Teneo said the ‘underperformance’ of the factory was due to ‘a number of factors,’ including ‘design issues resulting in production defects and re-working the modular units, the costs of which could not be passed on’. They added that the factory also suffered from ‘underutilisation and inability to absorb overhead costs’.
They added: ‘The modular factory was business critical to the delivery of the group’s live development sites and required additional funding to fund its losses and maintain its viability.’
Ian Killick, a director at shedkm, which worked extensively with House by Urban Splash, said: ‘Shedkm wasn’t involved in the technical design of the houses; this was handled by the factory’s in-house design/technical team, so we can’t really offer an opinion on the specific production challenges they faced.
‘More generally, though, successful Category 1 Modern Methods of Construction production does rely upon maintaining factory through-put, so any disruption to this caused by production or quality issues can have a serious effect on efficiencies.’
Directors at House by Urban Splash had identified the need for additional funding in early 2022 and approached Sekesui House UK to discuss options. Sekesui House UK, part of Japanese housebuilder Sekesui House, owned 48 per cent of House by Urban Splash’s shares and had already loaned the group money.
However, administrators say that House by Urban Splash directors were ‘unable to secure the funding [the business] required in the short to medium term’ and – despite cost-cutting measures – the company was forced to enter administration when it realised it could not pay its debts.
They also revealed that money is likely to be distributed to unsecured creditors of Urban Splash House Holdings Limited and Urban Splash Holdings Limited – including shedkm and Feilden Clegg Bradley Studios – following administration proceedings.
However, payments are unlikely to be made to unsecured creditors of the other companies in the House by Urban Splash group, namely: Urban Splash House Investments Limited, Urban Splash Modular Limited, Port Loop Holdings Limited, Port Loop Limited and Port Loop (Subco1) Limited.
Details about whether payments are likely to be made to secured creditors, preferential creditors and secondary preferential creditors of each of the companies in the House by Urban Splash group can be found in the statement of administrator’s proposal here.
Tags Feilden Clegg Bradley Studios House by Urban Splash ShedKM
Sign in or Register a new account to join the discussion.
We use cookies to personalize and improve your experience on our site. Visit our Privacy Policy and Cookie Policy to learn more. You can opt out of some cookies by adjusting your browser settings. More information on how to do this can be found in the cookie policy. By using our site, you agree to our use of cookies.