A legal agreement has been struck between 95% of the developer’s 300 unsecured creditors and its founder Lawrence Kenwright to draw up a plan that could see assets such as Liverpool hotels The Shankly and 30 James Street bought out of administration, the parties say.
The rescue strategy would also relate to several of Signature Living Group’s uncompleted development sites across Liverpool and Greater Manchester, including a 123-apartment project at 60 Old Hall Street in Liverpool and the conversion of the grade two-listed Victoria Mill in Miles Platting into 85 flats.
Administrators at Duff & Phelps were appointed on 15 April 2020 to Signature Living Hotel, which holds various freehold and leasehold interests of the wider Signature Living Group run by Kenwright. Duff & Phelps later reported that the entity collapsed owing £113m to investors.
In addition, five of the special purpose vehicles set up to own, manage or develop specific Signature assets fell into administration last year. By August, Kenwright had issued a statement saying he had reached a deal with investors to rescue their interests and the assets from administration, and he pledged to haul the business “from the ashes”. The deal was not completed until now.
The group of investors is being led by Thomas Scullion, an account from Northern Ireland who first invested in Signature Living in 2018 and approached Kenwright last January to express concerns about his investments, according to a statement from Kenwright this week.
In response to conversations with Scullion last year, Kenwright set up an umbrella company, UK Accommodation Group (UKAG), to restructure and oversee Signature Living Group’s operations, including managing all of the hotels. Scullion is a chairman of UKAG and leads its board of five directors with Kenwright as chief executive.
UKAG has now signed a legal agreement in the form of a contract with 95% of the 340-odd unsecured creditors to work together to rejuvenate Signature’s disparate ailing businesses, with Scullion having played a crucial role in galvanising support among the majority of investors, according to Kenwright’s statement.
The parties claim the collaboration between UKAG and creditors will seek to ensure investor returns, by mounting a financial case to rescue the business for submission to Duff & Phelps. It is understood the hoped-for deal with administrators could involve a buy-back of assets by UKAG, and/or a company voluntary arrangement (CVA) to enable the businesses to resume operations.
The legal agreement between UKAG and the creditor will ensure “there’s a stable foundation from which to continue the build-back process”, a spokesperson for Signature said.
Kenwright added: “Signature Living is continuing to navigate its way through the toughest time it has ever faced, and this [agreement] is most welcome and morale-boosting news.
“I am extremely grateful for the support of Thomas Scullion, the UKAG board and all the investors who have signed the agreement to help them realise the return on their investment. I am hopeful that further positive steps can now be made to bring the company out of administration, and we can keep pushing the boundaries of our offering.
“There are still some issues at various sites, which we will put right, but this is the start of that process and we are putting in the building blocks to do that.
“The hiatus in trading caused by the pandemic has, though, allowed us to complete new venues, funded by secured investors, and new guest propositions designed to increase our appeal in the ‘staycation’ market, which is forecast to enjoy high demand when restrictions on travel and hospitality venues are eased.”
Last year, the group completed the Dixie Dean hotel in Liverpool and Rainhill Hall near St Helens, and the Shankly Preston is due to complete this summer. Meanwhile, the Bankfield Centre, a former City of Liverpool College campus, is being converted into a luxury apartment block in West Derby village, The conversion of the vacant Liverpool office block Kingsway House into 117 apartments is also progressing.
Scullion said: “In signing this agreement, we, the investors, have demonstrated that we are united and willing to allow the company to continue, in order to be repaid in due course. If we are to continue along the administration route all the unsecured money will be gone and the business will be sold off, broken up and liquidated.
“The agreement is also an important collective statement of confidence. I was one of the biggest sceptics but have changed my mind. I have repeatedly returned to why I initially invested and that’s because I believed in the business model Lawrence has created. This was a business both established and trading profitably, one with customer experience at its heart and strong scalable opportunities.
“I came on board not only to ensure investors are protected and see a positive return, but also because I believe very strongly in the future of this business, despite recent troubles generated in part by Brexit uncertainty and exacerbated by the Covid-19 pandemic.
“Further, by establishing UKAG, we have brought stronger governance and control and removed some of the weight from Lawrence’s shoulders to allow him to do what he does best – build his business, create projects and drive value.”
It is not yet known what course of action, if any, the remaining 5% of unsecured creditors will take to recover their investments.
“A lot has happened to the business in the last 12 months,” Scullion said. “A breakdown in communications with investors – which I believe played a big part in creating this situation – will not happen again.”
Signature Living Group deployed a “complex” business model involving setting up SPVs to acquire disused or dilapidated properties and bring them back into use as residential units or hotels, the report from the administrators noted last year.
The units were typically sold prior to development to investors that then fund the schemes, with fixed returns.
Duff & Phelps has been contacted for comment on the latest news.