Investors’ pain as Dylan Harvey Residential crashes

DYLAN Harvey Residential, the Lancashire-based property investment brokerage company, went into administration on Tuesday leaving more than 500 investors out of pocket by £6.5m.

Mark Getliffe and Diane Hill at Manchester-based CLB Coopers have been appointed administrators of the Padiham business, which acted as sales agent for a number of residential apartment schemes across Manchester and the wider North West.

The company had a stated turnover of more than £50m and contingent liabilities of around £100m at April 2009.

However, TheBusinessDesk understands that although the company has debts of £100m on paper, it would only be liable to those developers whose schemes went ahead.

Around £280,000 was owed to the bank but this was recovered before the company went bust.

The majority of creditors are the 500 private investors who paid around £6.5m of deposits for 750 residential apartments – typically between £5,000 to £20,000 each.

The majority involve off plan reservations for schemes which never progressed into actual development due to market conditions and developer failures. These include Clippers Quay in Salford Quays, Zararchie Tower and Bengal Mill in Ancoats, and phases two and three of a development known as Fresh Salford.

The collapse does not affect the Mann Island development on Liverpool’s waterfront, which is part of a separate joint venture, or the commercial office space business and other companies within the wider Dylan Harvey Group.

Dylan Harvey Residential projects that have completed include Sector One in Prescott, Century in St Helens and Park Lane in Liverpool.

Set up as part of a group of companies in 1996 named after managing director Toby Whittaker’s two sons, Dylan Harvey Residential would typically market a scheme and handle the sales operation.

A client would put down a deposit on an apartment on a development from plan and once a customer reservation was secured, DHR would enter into a contract with the developer, committing the counterparties to buy the apartment on completion of the build.

Mark Getliffe of CLB Coopers said: “We are working hard to finalise the full financial position and explore all the options in respect of any value which can be recovered for creditors including working with the Dylan Harvey Group in relation to an enhanced position for creditors.

“The business appears to have failed because of the domino effect of the residential property market grinding to a halt. It was also affected by one of its contractual partners, Fresh Developments Ltd going into liquidation in April this year, owing DHR £1.7m. 

“In some ways not having to contractually complete on properties valued at the peak of the market and for which mortgages may now no longer be available may have limited the potential losses to the clients”.

Parent company Dylan Harvey Group said that DHR will propose a Company Voluntary Arrangement within the administration process to ensure that all unsecured creditors are given the opportunity to realise the value of monies paid to DHR within the formal process.

It said that subject to further legal advice it may be able to offer creditors the opportunity to exchange their claim against DHR for a DHG property purchase.
 
The group said in a statement: “The effects of the current global economic financial crisis have been well documented and in particular the adverse effects being experienced in the property sector. Lack of funding availability has severely impacted both developers in the construction of existing/planned projects and the purchaser’s ability to secure mortgage funds to complete the sales process at contracted prices agreed at the high point in the property market.

“DHR has not been immune to these factors. Investors have been unable to secure mortgage funds to complete on key schemes over the past twelve months which has had a material adverse impact on DHR’s cash flow. Further a number of DHR’s contractual partners have failed to secure development funding to commence planned developments and have either been forced to postpone developments indefinitely or been placed into liquidation. This has recently resulted in the write off of significant funds paid as deposits by DHR.

“DHR has done everything in its power to try and ensure delivery of all its developments but following the financial loss of significant deposits paid to now insolvent developers is no longer viable as a going concern.”

DHR counts celebrities Quentin Wilson and Jimmy White among its clients according to the company’s website, and Mr Whittaker reportedly enjoys a champagne lifestyle, counting  Liverpool footballer  Steven Gerrard among his close friends.