Brick By Brick facing takeover as Croydon Council goes bust12 NOVEMBER 2020 BY WILL INGBrick By Brick looks increasingly likely to be sold to a private-sector developer after its owner and funder, Croydon Council, was effectively declared bankruptCroydon issued a Section 114 notice yesterday (11 November), admitting that it will be unable to fill a £66 million hole in its spending this year, triggering a 21-day freeze on non-essential spending.The budget deficit comes after the council lost money on risky property developments, increased its spending on children’s services after an ‘inadequate’ Ofsted rating, and poured money into Brick By Brick – which is taking longer to become self-funding than was expected.The latest revelation throws uncertainty over an £108 million funding package Brick By Brick had been due to receive from the council in the next year – and is likely to mean the council has to sell, or find other private funding for, its development company.The AJ understands that Croydon Council has already received some offers from companies interested in buying Brick By Brick after the company’s chief executive, Colm Lacey, had aproached potential investors to safeguard its future.Last week, Lacey told the AJ: ‘What we are seeking to do is ensure that the Brick By Brick story continues, irrespective of Croydon’s finances. And that includes every element of the story: the scale and ambition of what we are doing; the design focus of what we are doing; the nature of what we are doing with architects, in particular now working with a diverse range of practice.’He went on: ‘We believe the fundamentals of the business are still there – we are making money, we are delivering a really good product, and that product is in high demand. Therefore, why wouldn't we want that to continue?’Any decision on the sale of Brick By Brick would be for Croydon Council, not the developer, to make. However, the decision could be taken out of the council's hands, as housing and communities secretary Robert Jenrick threatened to take ‘a more formal, statutory intervention’ into the borough after launching an urgent investigation in October.The 45-person strong Brick By Brick has its own in-house architecture practice – Common Ground – and is working with a range of other celebrated architects on big and small housing projects around Croydon.According to its latest business plan, the developer will cover its own funding from the receipts of housing sales in 2022/23 and repay its loans to Croydon Council in 2024/25. However, the dates for both of these have already been pushed back twice.Brick By Brick has been loaned almost £200 million by Croydon Council, without paying any dividend or interest payment.A damning report published by Croydon’s auditor, Grant Thornton, at the end of last month said the repayment of more than £110 million by Brick By Brick had been due by October 2020, but has been pushed back.SOURCE: https://www.architectsjournal.co.uk/news/brick-by-brick-facing-takeover-as-croydon-council-goes-bust
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