Examiner drafts deal to secure future of social housing scheme in Limerick
The examiner of an Irish construction firm that is building a social housing project in Co Limerick has drafted a proposed scheme of arrangement that could see funding secured to complete the houses as well as Estonia-based investors recouping their investment in the development.
The project was part-bankrolled by investors in Estonia via a crowdfunding website there called Evoestate. Dublin-based finance firm Property Bridges originated the loans from the website on behalf of Limerick construction firm Top Drawer Developments.
An examiner was appointed to Top Drawer last year as it became bogged down in financial difficulties related to the construction of 16 houses at Pallaskenry in Co Limerick.
“The originator is pleased to announce that a scheme of arrangement has now been brought forward by the examiner,” Property Bridges told investors in Estonia yesterday.
“At this stage, the final scheme has not been agreed upon and the originator’s lending team and legal advisors are negotiating the terms of this scheme,” it added.
“However, the scheme would see a new investor coming in and funding the project to completion,” according to Property Bridges. “It is a pre-condition of any proposed scheme that investors would receive, at least, 100pc of their principal, and the originator is currently working to ensure that he maximises the return to you from the sale of the houses in the development.”
Limerick City and County Council signed a fixed-price contract in August 2020 to buy the homes at the more than €3.5m development, called The Orchard Estate, following approval from the Department of Housing, Local Government and Heritage.
But as it was a fixed-price contract, the council had no mechanism to seek additional funding for the planned acquisition from the department as inflation costs and supply chain issues hit the overall price.
The council then assigned the purchase contract to housing charity Focus Ireland, which agreed to pay a higher price for the 16 homes than had been agreed by the council with the developer.
The council claimed that not doing so would result in an unfinished ghost estate, “with no plans for construction nor any delivery of social housing units in the short to medium term”.
“As the contract was executed as a fixed-price contract, there is no mechanism for the local authority to seek additional funding from the Department of Housing, Local Government and Heritage under the direct turnkey programme as a result of increased costs due to material inflation, supply chain issues, construction site shutdowns and a general shortage of construction labour,” the council said last autumn.
Completion of the estate was thrown into doubt again earlier this month when Property Bridges told investors in Estonia that it would oppose an extension to Top Drawer’s examinership if no acceptable scheme of arrangement could be secured.