Liverpool developer asks investors to pay early to prevent collapse of schemes
A developer in Liverpool has asked investors to pay early to prevent two delayed schemes from collapsing, BusinessLive has reported.
The Aura scheme is a project in the Islington area that is set to build 142 housing units and 1,000 student homes whilst Infinity towers is a £250m project that is set to build three towers in Leeds.
Elliot Lawless of Elliot Group has sent a letter to all investors in the Aura scheme and according to him a “similar one” to investors in the Infinity towers.
In the letter, obtained by BusinessLive, he said that work was suspended for four weeks whilst funding was being sought.
Because of this he has asked investors for repayments over a year earlier than was originally scheduled.
This involves 25% deposit of the full purchase price by January and by the end of July, a 10% deposit.
He has also vowed to put forward £7m of his own money too.
In the letter he told investors that the preferred debt funder for the project, Maslow Capital, has pulled out after contractual conditions it had specified before signing a deal with the Elliot Group were not met by 95% of investors.
Last month Lawless was arrested on suspicion of conspiracy to defraud, bribery and corruption.
He denies the allegations.
He has not been charged but is subject to an investigation by Merseyside Police.
The letter seen by BusinessLive said: “I cannot stress strongly enough that this internal funding by us is a necessity and if we do not get buy in from all investors we have been advised to place the Company into some form of insolvency process, which could take the form of creditors voluntary arrangement (a CVA) or an administration.
“This early funding by you, together with the cash injection by me, will ensure that the scheme has the necessary funds to pay all of the outstanding construction costs.
“Ironically, with us reverting to a 100% investor/developer led funding approach, investors are now in a stronger position as no third-party lending or security will be injected into the development.”
Vermont has said once enough funds have been raised it will continue works.
Elliot Group is now using a ‘fully cash-funded model’ and Lawless has pledged deposits would be held and only used when enough to complete the works was raised.
He said those investors giving earlier payments would have interest of 3% paid back on the deposits.