Southern Housing, one of the largest housing associations in England, has said it was hit for more than £36m by Henley Construct before the contractor went under.
The South London-headquartered residential builder entered administration in April 2023, weeks after Construction News revealed it had placed most of its staff on unpaid leave.
At the time, it cited issues including Brexit, Covid and rising costs.
A newly released report by administrators at 360 Insolvency, due to be the last before Henley Construct is liquidated, noted that Henley defaulted on contracts and terminated them before it collapsed.
It says more than one housing association has claimed loss and damage as a result of Henley’s actions, but only names Optivo Development Services (ODS), which submitted a claim for just over £36m.
Optivo, its parent company, merged with Southern Housing Group in December 2022 to form Southern Housing.
A Southern Housing spokeswoman said: “ODS contracted with Henley Construct to deliver several affordable housing schemes.
“The claim noted by the liquidators relates to losses suffered by ODS as a result of Henley Construct’s failure to proceed regularly and diligently with these projects.
“The impact of these failings was a significant delay in the delivery of hundreds of much needed affordable housing units in Croydon and [other] London boroughs.”
She said the issues related to four sites, two of which have since been remobilised.
The spokeswoman said Southern Housing was unable to confirm which sites were affected due to ongoing “commercially sensitive negotiations”.
Among the jobs previously announced by Optivo featuring Henley as contractor were a nine-storey £35.2m development for 116 affordable homes in Cherry Orchard Road, Croydon; 75 homes in Thornton Heath as part of a £27.2m scheme; and a 45-apartment block on the site of a former car showroom in Tulse Hill, Lambeth.
The administrators said they did not expect that any money would be available to pay debts, including the £6.7m they initially believed was owed to subcontractors, suppliers and trade creditors.
They added that total claims are now expected to be higher than that, “mainly due to the crystallisation of contingent liabilities and contract default terms”.
Although mentioned in the report, the sum claimed by ODS is not included in a total estimate of money owed to creditors.
Henley Construct turned over £22.9m in the year to 31 December 2021 and made a pre-tax profit of £335,000, according to its final published accounts.
The year before, it posted a pre-tax loss of £1.5m on revenue of £13.2m. Its revenue had reached £40.8m in 2018.
Henley Construct’s parent company, Henley Homes, went into administration in August 2023, with administrators later citing causes that included the collapse of Henley Construct.
They said Henley Construct had been unable to fulfil its contractual obligations due to tight margins and rising material and labour costs.
Administrators also cited Henley Homes as not having the money to pay a former director owed £2.4m after it lost a legal dispute with him in the High Court.
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Ian Weinfass