Developer is placed into administration

Aug 19 2008 Exclusive by Bill Gleeson, business editor

LIVERPOOL-BASED Vermont Developments has been placed into administration after a £40m residential development in Salford was put on hold.

Sources close to the property group claim the move to place Vermont in administration came “out of the blue”.

Vermont was placed into administration by London-based Downing Corporate Finance on Friday. Insolvency firm Wilkins Kennedy has been appointed as administrator.

Dowing had initially lent Vermont £4m to part-finance the construction of the Foundry Wharf development at Salford, but the scheme was mothballed two months ago in response to slowing house sales.

The source said the move to put Vermont in administration was a surprise as the Liverpool company had been engaged in what it thought were constructive talks to renegotiate the debt owed to Downing.

As part of those renegotiations, Downing had taken an equity stake in Vermont in June, and Vermont transferred its Rumford Court property in Liverpool city centre into the newly-formed joint venture with Downing just last week.

The source said: “The move by Downing Corporate Finance came completely out of the blue and is a hasty and clumsy attempt to extract maximum value from Vermont, which it joined as a shareholder only nine weeks ago. Nobody here had any knowledge of this action, and we believed the new shareholder was keen to exploit new opportunities with us.”

The source said he believed the two sides had reached an agreement to repay the debt by October next year.

“It now seems that the events of the past month or two were much less straightforward,” he said.

Vermont’s other major scheme, a joint venture with Ethel Austin Properties at Sefton Street, is not affected by the administration. Work continues at that site.

Vermont shareholder Mark Connor is thought to be taking legal advice about his next move.

Nobody from Wilkins Kennedy or Downing Corporate Finance was available for comment last night.