Middle England ‘faltered when student fees increased’
LIVERPOOL buy-to-let developer Middle England Developments was hit by rising tuition fees and tighter rules on student visas, according to administrators.
The firm, which failed last year with debts of around £4m, specialised in selling students rooms to investors and guaranteeing rental returns.
But according to a report by administrators at Leonard Curtis it struggled to meet these payments after demand for rooms fell.
Middle England, owned by Nigel Russell, also faced a string of problems at its schemes, including a fire and unexpected costs, and was served a winding-up petition by HM Revenue & Customs in September after it fell behind on tax while trying to maintain rental payments.
Mr Russell sought to avoid administration with a company voluntary arrangement (CVA) offering £45p in the pound, but according to the report, one creditor said the CVA contained inaccurate information and threatened to challenge it in court if approved.
Freehold properties in Liverpool owned by the group include: Alexander Terrace, Hatton Garden; The Papermill, Henry Street; St Joseph’s, Woolton Road; Victoria Court, Princes Road; St Andrew’s Place, Rodney Street; Epsley Court, Gradwell Street.
Other properties have been transferred to connected companies, and the administrators said they plan to, “review the sales/transfers to ensure that they are at arms length, and at value”.
The report also sheds light on the company’s £1 acquisition of the grade II-listed St Andrew’s Church in Rodney Street from Liverpool City Council. Some £3.8m was spent partially converting the building which had planning for student flats, although Middle England has been renting it as a hostel. The council promised a grant of £200,000 and English Heritage offered £223,000 providing certain conditions were met. However, neither sum was paid and English Heritage has now withdrawn the offer.
The document also shows that £1.87m is owed to the company from connected or associated ventures, including jewellery retailer Russell & Case which owes £629,569. “Each debtor has confirmed that they are not able to make repayment in full at this time,” said the report.
The company had total debts of £3.8m with £674,923 owed to HM Revenue & Customs and £1.7m owed to trade creditors. A related company, Richmond Luxury Living, which operates the former Merseytravel HQ in Hatton Garden as The Richmond, was owed £1.49m. The administrators estimate a further £260,000 could be claimed by investors still owed rental guarantees.
Management information showed revenues slipped to £18.6m in the year to October, down from £20.9m and pre-tax losses increased to £1.5m from £655,000. But administrators said the latest figures were not “agreed” and “no real reliance” should be placed on them.
