Click here to read the full statement issued by KW Linfoot announcing that the company has been placed in administration
The statement reads:
Due to the continued difficulties in the banking and financial sectors the Directors of KW Linfoot Plc have reluctantly made the decision to place the company into administration as of the 24 February 2009. Gary Blackburn and Paul Whitwam of BWC Solutions in Leeds have been appointed Administrators with the assistance of solicitor's Irwin Mitchell Leeds office.
Contrary to the negative press coverage given to the residential market, particularly in Leeds, KW Linfoot Plc has continued to experience significant demand for both its product and city centre living. City centre properties remain popular and this is reflected in the continuing demand for rental properties, rising rental values and 90 per cent plus occupancy rates.
Over the past 12 months, however, like every other property development business, KW Linfoot Plc has found its dealings with the banks increasingly difficult due to a complete withdrawal of development funding to enable it to progress new schemes. This is compounded by the dramatic reduction in mortgage products making it increasingly difficult for purchasers to complete on apartments purchased off plan. In taking this action the banks have effectively strangled the business and denied it any opportunity to trade through these difficult times.
The Board of KW Linfoot Plc recognised the problems in the market and UK banking sector some 12 months ago and since then have been actively seeking alternative funding routes. It has identified a significant appetite from overseas investors who remain very enthusiastic about investing in the UK and have been willing to invest up to 50m into KW Linfoot Plc's schemes. Unfortunately the lack of bank funding to match their investment has resulted in potential deals falling through.
Notwithstanding the above the Director's of KW Linfoot Plc would like to thank their corporate banker NatWest that proved to be a notable exception offering the business continued support until it became clear that the administration was the appropriate route.
Once it became apparent that the funding difficulties would affect the ongoing viability of the company, its Directors have worked extremely hard to reduce the impact on suppliers, contractors and professionals. The company has taken significant steps to reduce ongoing expenditure by reducing staff numbers from 34 to 10, reducing outstanding creditors progressively on a pro rata basis over a number of months and most importantly taking steps to protect ongoing developments and money invested by the general public.
The Lumiere, Manyoo and Manor Mills schemes remain unaffected by the administration of KW Linfoot Plc as they are run under joint ventures and will be taken over by the company's joint venture partners. As part of the ongoing development of these schemes the KW Linfoot team will continue to manage the construction, sale and legal completion of the schemes.
Any deposits paid by purchasers in the three schemes remain protected either by cash held on deposit or the Zurich and NHBC policies put in place. Both Frasers Ventures Ltd and Yoo (UK) Ltd are companies with rock solid covenants and give all three developments significant security moving forward. Where people have contracted to buy properties at Manor Mills they remain contractually obliged to complete the purchase of the property and should continue to liaise with the Linfoot team through the existing contact numbers and e-mail addresses. All customers are being contacted individually to be advised on the situation.
Due to the efforts of the Directors of KW Linfoot Plc the outstanding bank debt has been reduced from 55m down to 2.6m on a pro rata basis at the point of going into administration. The reduction in outstanding debt has also been as a result of a significant injection of capital from the principal shareholder Kevin Linfoot. Having significantly reduced the level of outstanding creditors the Directors were unwilling to incur further debt and as a result took the difficult decision to place the Company into administration.
Whilst it is very disappointing that the Director's have been forced to take the action set out above it is a testimony to the previous success of the business since it's formation in 1981 that it has had sufficient cash and assets to reduce the outstanding bank debt and unsecured creditors massively before administration .
Looking forward Kevin Linfoot and the Director's remain hugely confident in the City of Leeds and believe that Leeds and the rest of the UK will bounce back from this recession. It is only because we have had such a prolonged period of growth that we have forgotten that downturns such as this have happened historically and we always recover. It is the speed and ferocity of the downturn which has caught everyone off guard.
We all need to take greater pride in the city. Leeds is a great city but appears desperate to talk itself down inviting ill informed attention seekers such as Maxwell Hutchinson to the city to rubbish development undertaken so far; he should do a compare and contrast from old photographs to see how far this city has come in the last 20 years.
Kevin Linfoot and the KW Linfoot team remain committed to the city and are very proud of the legacy that they have left behind but are not content to draw a line at this point. The Team is already collaborating on new ventures that will seek to support business and entrepreneurial spirit in the region. There will be more detailed announcement in the coming months.