The firm behind the development has run out of funding options but a new buyer could be found
The developer behind Preston’s much-delayed Shankly Hotel ran into a financial crisis after factors including Brexit, asbestos and Covid-19 repeatedly delayed construction, new documents have revealed.
Work has once again stopped at the former Post Office building in the city centre after Lawrence Kenwright’s Signature Living Preston firm entered administration in August. LancsLive can reveal that that process was launched by a lender which had put £12m towards the project but ran out of patience.
Meanwhile, a construction firm involved in the works was owed £4m when Signature’s funding dried up. The administration process is being carried out by Manchester-based Kroll Advisory and a first update has now been provided by administrator Michael Lennon.
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In his report, he explains that hope remains for the development to be completed with a marketing exercise set to be launched. The £15m development was first announced in 2017 when Signature bought the building from Preston City Council, only to be repeatedly hit by delays including the Covid lockdown which halted construction work.
If it is ever completed, the property would be used as a hotel, restaurant, bar and private events venue. It will have a rooftop terrace, 65 bedrooms and space for 230 diners with the Shankly name taking that of its sister hotel in Liverpool which in turn was named after the legendary Liverpool and Preston North End football manager.
A launch date of summer 2021 was once touted but uncertainty now once again surrounds the project after the Signature’s collapse. In his report, Mr Lennon explains how works ran into difficulty.
He said: “Significant delays to the development of the property occurred from 2019 as a result of Brexit uncertainty. asbestos that was found within the building that needed rectifying and the Covid-19 lockdown measures that put a halt to all property development. Activity resumed on the Property intermittently from June 2020 with the easing of the COVID-19 lockdown measures, for example, the roof extension was completed, and interior works were progressed.
“However, the company failed to make sufficient progress with building compliance matters, including the fire strategy continuing to not be agreed via building control despite positive site meetings with Preston City Council. Cladding was also an area that required attention.”
Mr Lennon explained that funding is required to finish the project but it is not known how much will be needed before building control can be signed off. The failure of the company to meet its debt financing obligations, combined with the cost overruns and delays, meant that further funding is required. But as the lending facilities had expired, Lyell Trading Limited issued a demand for repayment of its £12m debt before approaching Kroll about launching the administration process.
The report also revealed that £4m is owed to SW Construction. Like the money owed to Lyell, this was borrowed against the company’s assets and is continuing to accrue interest and charges.
A total of £6.8m is owed to unsecured creditors according to the company’s accounts. The administrator’s report suggests it is unlikely that this full amount will be repaid, with some likely to get as little as half the amount owed. Meanwhile, investigations are continuing to examine the £1.4m owed to other companies within the wider Signature Living Group and another £1.7m which is due from other companies.
The report notes that there are more than 60 entities within the group, adding: “Due to the nature of the complex group structure, the joint administrators are in the process of completing their investigations into the financial position of the company, paying particular attention to the reconciliation of the intercompany loan position.
“The joint administrators continue to analyse the company’s books and records, in conjunction with working with the senior management team within the group, who are preparing up to date financial statements for each entity, as well as reconciling the intercompany position for the company. Demand letters will be issued to the relevant companies in the Signature Group once the values are verified, seeking proposals for the repayment of the intercompany loan debtor balances.”
Hope remains that the project could one day be completed and Mr Lennon says that it is hoped a sale will be completed within the administration process, allowing someone who is more able to complete the development to take over.
- 05:05, 12 OCT 2022
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