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Major housing associations listed as creditors in Willmott Dixon subsidiary administration
Several large associations have been listed as creditors in the administration of a housing subsidiary linked to large national contractor Willmott Dixon, Inside Housing can reveal.
A total of 12 associations, including Clarion, L&Q, A2Dominion and Anchor Hanover, are listed as contingent creditors of WPHV, a housing subsidiary of Willmott Dixon that was involved in the construction of numerous developments for social housing landlords before it was wound down.
Formerly known as Willmott Dixon Partnership Homes, WPHV was put into administration on 22 December.
The business was previously Willmott Dixon’s primary residential arm. It posted a turnover of £213m in 2016 and had at one time delivered nearly 2,000 homes a year for private and public sector clients, including many social landlords.
But its parent company took the decision to stop it from taking on new business in the 2017/18 financial year. The contractor said the decision was taken to meet the desire of shared customers to consolidate activity through a single entity and recognise the mixed-use and complex schemes.
According to the administrators’ proposals, the company owed £9.6m when it was placed in administration in December, including £3.8m to trade creditors including sub-contractors, lawyers and material suppliers. In total, the administrators list more than 700 trade creditors.
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The proposals also lists 27 contingent creditors made up of housing associations, care home providers, house builders and councils. This includes several housing associations such as Hyde Housing and Network Homes, as well as Hackney Council and Camden Council (see the full list below).
Contingent creditors are creditors where it is not yet known by administrators the exact amount of money owed to them by the company in administration. This could be for a number of reasons, including payments around loan agreements, payments linked to the delivery of targets on a contract, or other reasons. It can also be linked to an outstanding and unresolved legal claims over construction defects or fire safety issues.
Inside Housing does not have details of the reason why the companies in the list are noted as contingent creditors and does not know which ones have outstanding claims against Willmott Dixon.
Inside Housing understands that several social housing clients do currently have claims out against WPHV to recover money over defects and fire safety issues.
This is in common with other contractors which, following the Grenfell Tower fire and the subsequent changes to building regulations, have seen an increase in the number of claims against contractors and developers over building defects and fire safety issues.
The administrators report said there are currently 18 projects in which claims have been commenced against WPHV in relation to defects.
The report states that the company has insufficient property for a distribution to be made to unsecured creditors, which includes trade and contingent creditors, and it is likely that the only distribution that will be paid will be to its secured creditors. Once this has been paid, the company will be dissolved.
For those clients that have made claims against a contractor and have outstanding claims, if successful, claimants may be able to recover cash through insurers or collateral warranties or a parent company guarantee.
However, in some cases may only receive a percentage of what they are owed. New legal claims cannot be brought against a dissolved company. There is no suggestion WPHV has been put into administration to avoid these claims.
In addition to the money owed to creditors, WPHV also owed an unsecured balance to Willmott Dixon Holdings of £5.8m. It also has a floating charge of £2m.
The administrator’s proposals said the company had not taken on any new work since 2017 and its only operation post that time was to complete legacy projects. To support this, Willmott Dixon Holdings injected £11m worth of new share capital into the business since October 2019.
However, after seeing the forecast costs of completing the company’s legacy projects and claims relating to defective work and cladding and fire-stopping works post-Grenfell, it decided to withdraw its support.
Launched in 1974, it was building nearly 2,000 homes a year for private and public sector clients and had a turnover of £213m in 2016 and posted profits of £6m.
However, since the Grenfell Tower fire, some of the blocks built by WPHV have required remedial works as a result of the changing legislation post-Grenfell. This includes a 50-home Catalyst block in which residents had to be decanted because of fire safety issues and L&Q’s 54-home Arch Street development in Elephant & Castle, where residents were also forced to move out of as work, including replacing the cladding, was carried out.
Inside Housing is not aware of any claim against Willmott Dixon on either of these schemes.
The company was also the builder responsible for the Bridport House development in Hackney, where the council decided to decant 41 residents from the block after defective insulation needed to be replaced. In March 2019, a piece of one of the balconies also fell from the second floor. The remediation project on the block was worth £6m. Hackney Council said in 2019 that it was considering legal action against WPHV, although the builder said no legal action had been brought and the two parties remain in dialogue.
Clarion, Catalyst, A2Dominion, L&Q, Bellway and Network Homes declined to comment. Inside Housing has contacted Camden Council, Hackney Council, Taylor Wimpey, Peabody, Newlon Housing Trust and Hyde Housing for comment.
A spokesperson for Anchor Hannover said: "WPHV are not undertaking any projects for us that are currently under construction. We continue to work with Wilmot Dixon and look forward to continue working with them in the future."
Willmott Dixon’s full response
“The administrators are obviously acting independently, so we are unable to comment on their activities or progress.
“However, Willmott Dixon can confirm that WPHV Ltd, a subsidiary company that ceased taking on new contracts over four years ago, was placed into administration in 2020.
“This was an unfortunate but necessary step for a company which has been winding down its activity ahead of what was always intended to be an eventual dissolution.
“While administration was not intended to feature in that process, it has been an unexpected consequence of the failed building control system in the UK. There now exist thousands of residential building designs throughout the accommodation sector previously certified as being fully compliant with building regulations that are now being retrospectively challenged, widespread reinterpretation of statutory regulations and guidance, and the inevitable prospect of extensive litigation.
“Quite rightly the government has established the Building Safety Fund to provide support to building owners in rectifying these failures while design responsibilities are established through supply chains. It is, of course, ironic that the public sector’s own building control system is protected from being drawn into litigation.
“Notwithstanding the administration process entered into by WPHV and while Willmott Dixon does not have or presently accept any contractual or other legal obligations to do so, it continues to allocate resources to investigate issues raised and interrogate responsibilities – whether those rest with WPHV, professional designers and other consultants, supply chain partners, insurers, or indeed customers themselves (if they require betterment) – with the aim of establishing, co-ordinating and delivering a properly funded and mutually acceptable rectification plan.
“In the same vein it will, of course, also continue to support supply chain partners in receiving any retention monies that remain outstanding, if and when they become properly due.”
Housing associations, councils and house builders listed as contingent creditors
- Clarion
- Reading Council
- Bellway Homes
- Notting Hill (now part of Notting Hill Genesis)
- Newlon Housing Trust
- Catalyst
- A2Dominion
- L&Q
- ExtraCare Charitable Trust
- Octavia Housing
- Anchor Trust
- Old Ford Housing (now part of Clarion)
- Family Mosaic (now part of Peabody)
- Network Homes
- Taylor Wimpey
- Hyde Housing
- Camden Council
- Hackney Council
