Shepherd owed £15m on failed scheme

Shepherd Construction is owed £15.5m for its work on the collapsed Wakefield Trinity Walk shopping centre scheme in West Yorkshire, with little prospect of recouping its debt.

A creditors’ report filed with Companies House says the £200m scheme went into administration owing £68m to its banks. The document says it is now worth about £7m, on which the lenders have first call. A further £21m is owed to “preferential creditors”, which include Shepherd.

A hit of £15m would place pressure on the finances of Shepherd, which made a loss of £9.2m in 2008, after a £14m hit on a delayed student housing scheme in Nottingham. Vaughan Burnand, its chief executive, left in October last year.

A source close to the privately owned builder said it might take on the scheme with its own development division if no buyer was found.

The 500,000ft2 Trinity Walk scheme failed in March after Anglo Irish Bank decided to withdraw its financing for the scheme. At that point, Debenhams and Sainsbury’s had signed up as tenants and a £7m public sector bailout had been agreed with Wakefield council.

It was being developed by a joint venture between Modus and property investor Ciref. The venture is now owed £3.5m.

A source close to Shepherd said it might use its developments division to take on the scheme itself

Other creditors include Turner & Townsend, which is owed more than £50,000, lawyer Eversheds, which is owed £155,000, and CB Richard Ellis, which is owed more than £20,000.

KPMG, which compiled the report, said the scheme had a book value of £86m, but that it was likely to realise only £7m.

A spokesperson for KPMG said the administrator was “liaising with interested parties” over recouping the value from the business, but refused to comment on whether it was trying to sell it as a going concern.

It is not known what the effect of the collapse will be on Shepherd’s supply chain.

Shepherd is thought to have had 186 workers on the site. They have been redeployed since the collapse.

A spokesperson for Shepherd said it was looking at a “number of options” to keep the scheme going, and that the firm was “one of the most financially strong contractors in the country”, and was “currently on site with numerous other projects, with a very strong order book going forward”.