Administrators of collapsed developer Pinnacle Angelgate have said Manchester City Council’s view that planning permission for the long-stalled £77m scheme had lapsed was “demonstrably wrong” and has launched a challenge to overturn the council’s position.
The site on Dantzic Street has been largely empty since the collapse of developer Pinnacle (Angelgate) last year, which entered administration in September, claiming to owe £30m to its creditors.
Planning permission was secured for a £77m, 344-home scheme over two towers in 2013, and work started on site in 2016 before grinding to a halt as original contractor PHD1 entered administration.
However, while Manchester City Council told Place North West earlier this month that planning had lapsed, and that any new development on the site would require fresh planning permission, a progress report from Pinnacle’s administrators Moore Stephens has revealed a disagreement between the council and the administrator whether this was the case.
The administrator is understood to have launched a challenge to the council’s view that planning had lapsed and that the best course of action would be to bring the plot forward for sale with planning permission still in place.
Moore Stephens said the council’s position has “not ever been accepted by the administrators” and that it was “demonstrably wrong”, and as a result, the administrator has launched its challenge with the council based on “specialist legal and planning advice”.
The site is currently out to auction, which is due to close at 2pm tomorrow, with a guide price of £5.2m. It is understood there is a reserve price above this figure in place, but the exact reserve is being kept under wraps while the auction is in progress.
The administrator said it has provided evidence to potential buyers that the planning permission on the site has not lapsed, despite the council’s position.
It is understood the successful bidder will able to continue Moore Stephens’ challenge to overturn the council’s opinion if it wishes to do so.
Subject to a sale, a higher-density scheme could be brought forward on the site, and a number of parties have already expressed an interest including Far East Consortium, the council’s development partner for the £1bn Northern Gateway which covers land on and around Dantzic Street.
The administrators and their advisors Lambert Smith Hampton decided to bring the site to auction after failing to a receive a feasible proposal to build out the site as planned.
Moore Stephens’ report indicated there had been five proposals to build out the site put forward, but none of these were found to be viable owing to a funding gap.
It is understood a number of main contractors priced the job at around £45m to £50m, significantly above Pinnacle’s original estimate of £22.1m, which then nearly doubled to £43m.
Pinnacle claimed to owe its creditors £30m at the time of its collapse, including a number of buyers who had purchased apartments at the scheme. When the site is sold, the administrators have estimated buyers would receive 21.5p in the pound, while unsecured creditors were likely to receive nothing. This would leave buyers £23.7m out of pocket.
Pinnacle (Angelgate) is a special purpose vehicle for developer Pinnacle, which continues to trade. Another of company’s businesses, Pinnacle Student Developments (Liverpool), entered administration earlier this year, owing £12m to its creditors, while another two companies, Pinnacle Student Developments and Pinnacle Residential Liverpool, have also entered administration this month.
Convicted conman Tony Freeman has been linked to the Angelgate development, and Pinnacle confirmed that Freeman was a “consultant that strategically advises the Pinnacle Alliance board of directors” but “does not own Pinnacle and is not a director of Pinnacle”.
Manchester City Council was approached for comment.