Lancashire-based property investment brokerage company Dylan Harvey Residential has been put into administration.
Manchester-based CLB Coopers have been appointed administrators of the Padiham-based company, which acted as sales agent for a number of residential apartment schemes across Manchester and the North West area.
Mark Getliffe of CLB Coopers said: "We are working hard to finalise the full financial position and explore all the options in respect of any value which can be recovered for creditors including working with the Dylan Harvey Group in relation to an enhanced position for creditors.
"The business appears to have failed because of the domino effect of the residential property market grinding to a halt. It was also affected by one of its contractual partners, Fresh Developments going into liquidation in April this year, owing DHR £1.7m. In some ways not having to contractually complete on properties valued at the peak of the market and for which mortgages may now no longer be available may have limited the potential losses to the clients".
The company, set up as part of a group of companies in 1996 named after managing director Toby Whittaker's two sons, stated a turnover of £50m and contingent liabilities of around £100m in April this year.
Creditors include 500 private investors who have paid between £5,000 and £20,000 each, totaling around £6.5m, on deposits for residential apartments.
The majority involve off plan reservations for schemes which never progressed into actual development due to market conditions and developer failures.
These include Zararchie Tower and Bengal Mill in Ancoats, Clippers Quay in Salford Quays, and phases two and three of a development known as Fresh Salford.
The Mann Island development on Liverpool's waterfront, which is part of a separate joint venture, the commercial office space business and other companies within the parent company, the Dylan Harvey Group, will not be effected as result of the collapse.
The Mann Island joint venture developer, Neptune Countryside, said in a statement: "Our contract is with Mann Island Properties [a separate Dylan Harvey company] which is unaffected by the administration of Dylan Harvey Residential and project construction is progressing well. The scheme is being developed by the substantial partnership of Countryside Properties and Neptune Developments who will ensure the delivery of the scheme.
"The fact that the scheme is now visibly taking shape as a major landmark on the Liverpool Waterfront allows people to appreciate that this is a development of exceptional quality in a unique location. Sales have actually increased in recent months and there are now only a small number of apartments still available."
There have been a number of other Dylan Harvey Residential projects that have completed. These include Sector One in Prescott, Century in St Helens and Park Lane in Liverpool.
The Dylan Harvey Group said Dylan Harvey Residential will propose a Company Voluntary Arrangement within the administration process to ensure all unsecured creditors are given the opportunity to realise the value of monies paid to Dylan Harvey Residential within the formal process."
It said that subject to further legal advice the Dylan Harvey Group may be able to offer creditors the opportunity to exchange their claim against Dylan Harvey Residential for a Dylan Harvey Group property purchase.
In a company statement, Dylan Harvey Group said: "The effects of the current global economic financial crisis have been well documented and in particular the adverse effects being experienced in the property sector. Lack of funding availability has severely impacted both developers in the construction of existing/planned projects and the purchaser's ability to secure mortgage funds to complete the sales process at contracted prices agreed at the high point in the property market.
"DHR has not been immune to these factors. Investors have been unable to secure mortgage funds to complete on key schemes over the past twelve months which has had a material adverse impact on DHR's cash flow. Further a number of DHR's contractual partners have failed to secure development funding to commence planned developments and have either been forced to postpone developments indefinitely or been placed into liquidation. This has recently resulted in the write off of significant funds paid as deposits by DHR.
"DHR has done everything in its power to try and ensure delivery of all its developments but following the financial loss of significant deposits paid to now insolvent developers is no longer viable as a going concern.
"Within the administration process DHR will propose a Company Voluntary Arrangement, which in broad terms will seek to ensure that all unsecured creditors of DHR are given the opportunity to realise the value of monies paid to DHR within the formal process. Subject to further legal advice the Dylan Harvey Group may be able to offer creditors the opportunity to exchange their claim against DHR for a DHG property purchase opportunity.
"The Dylan Harvey Group continues to trade successfully following the successful restructuring of key lending facilities, comprehensive reduction in its operating costs and the strength of rental returns on its property portfolio."