Developer behind luxury flats collapsed with debts of £26m
- Credit: Left: www.godfreylondon.co.uk / Right: Archant
A luxury development intended to rejuvenate Kilburn High Road went into administration owing more than £26m, we can reveal.
"Park Place” – an apartment block ten minutes’ walk from West Hampstead station – was the brainchild of developer Paul Godfrey.
He borrowed £19m from OakNorth Bank in 2017 to fund the project. But the bank appointed administrators in December after a string of delays.
They found the company’s bank account was empty and other creditors were owed £630,000.
Mr Godfrey used OakNorth’s cash, along with £13m from other sources, to purchase a plot of land overlooking Kilburn Grange Park.
He set up a limited partnership – 254 Kilburn HR LLP – to manage the project, which was expected to make more than £10m profit.
A press release claimed the scheme would “spearhead the ongoing regeneration of this important high street.”
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But in December the LLP went into administration owing OakNorth £25.52m.
In January, we reported that buyers who paid deposits in 2018 and were told they could move in by spring 2019 had still not moved in.
One said: “I’m furious. I had worked hard to get a deposit together. It’s had a massive impact on my life.”
Another said the delays had cost him almost £25,000 in rent and legal fees.
Mr Godfrey said Brexit and Covid-19 had caused “unprecedented” delays and claimed the project had been hampered by planning conditions.
Planning permission granted by Camden Council said buyers could not move in until a housing association agreed to take on the “affordable” units.
A housing association had signed up but pulled out last summer, citing economic uncertainty due to the pandemic.
The council agreed to let a handful of buyers move in while a new housing association was found, but it was not enough to stop OakNorth calling in administrators.
Buyers who did move in said it had been a "nightmare" and they felt they were "living in a construction site".
Moorfields, the appointed administrator, said in its report that its priority was to repay the bank. However, it does not expect to be able to do that in full.
It hopes to minimise the bank’s losses by finishing and selling all of the flats in the development, currently described as “90 per cent complete”.
However, other creditors - including HMRC, which is owed more than £500,000 - are not expected to get anything, Moorfields wrote.
One of those creditors is Floorcraft, a family-run flooring business in Walthamstow, which is owed more than £88,000.
Owner Steve Long said the company was hired for the Park Place project by Godfrey Construction (London) Ltd, a company Mr Godfrey had set up to build the block on behalf of the LLP.
He said Floorcraft was paid for most of its work, but “payments got flaky towards the end and eventually stopped.”
“I got a guarantee from Godfrey Construction that in the event that they failed to pay, the parent company – 254 Kilburn HR LLP – would be liable,” he said. “But then they duly went into administration.
“It’s not going to cripple us. It’s something we can absorb. But it’s just very, very disappointing. It’s a significant sum and it should be paid.”
Godfrey Construction (London) Ltd went into liquidation in September 2020, with debts of more than £3m and almost 70 creditors, including Floorcraft.
It owed £303,427 to HMRC. Other creditors included British Gas, BT and EDF.
Paul Godfrey claimed the construction company had “successfully completed” all of the developments it was working on before it was liquidated.
He said he did not agree with Moorfields’ assessment that OakNorth could not be fully repaid.
“However, given Moorfields have now been appointed to manage the completion and final sales at the scheme, we are no longer in control of costs,” he continued.
“The outcome of unsecured creditors’ claims, including HMRC, is clearly no longer within our power. We contest the calculations.
“We believe that in principle it would be viable to complete the scheme in a manner which maximises the body of the creditors’ interests, realising sufficient funds to settle them, as was our intention.”
Mr Godfrey said “existing sales will continue as normal” and that his firm, Godfrey London – which is still trading and should not be confused with similarly named companies – was still marketing the flats.
Moorfields declined to comment.