Blenheim House director loan dispute escalates

Adam Stephens and Kevin Ley of S&W Partners, the joint administrators of Blenheim House Construction, have secured a settlement of a £1.48 million project debt and extended the administration for a further two years as they continue pursuing trade receivables and outstanding loans to former directors.

Since we last wrote about the matter in March, the administrators have resolved one of the estate's largest outstanding receivables, relating to the 50 St James Street project. The debtor owed £1,481,075 and had originally agreed to provide a charging order over its property and repay the debt in two stages beginning in December 2024. Following what the administrators described as protracted negotiations, a settlement was signed on 15 July 2026. The estate received £180,000 toward the debt and a £30,000 contribution to legal costs the following day, followed by a further £1.07 million on 30 July. The administrators now consider the debt paid.

Separately, the administrators recovered £339,279 of debtor retentions during the latest six-month reporting period through Kinetica, taking recoveries from the receivables assigned to the quantity surveyor to £443,657. Kinetica is still actively pursuing seven debts, while six others have been referred to construction solicitors Setfords in an effort to secure settlements without formal litigation. The administrators currently expect at least £8.4 million of the remaining trade receivables to prove irrecoverable, with a VAT bad debt relief claim to be made once the collection exercise is complete.

The dispute over loans advanced to two former directors has also moved closer to potential litigation. In the March update, the administrators said settlement offers had been received but were too low. Those offers have since been rejected, and no improved proposal has been made. The directors instructed lawyers in May, while the administrators retained Spencer West to pursue the matter. The directors' solicitors have requested a substantial volume of information from Blenheim House's accounting and electronic records, and the administrators said responding will be time-consuming because of the volume of material involved.

The administration, which began in July 2024 following heavy losses on several central London office projects, has also been extended substantially. The High Court approved a two-year extension on 1 July, moving the end date from 17 July 2026 to 17 July 2028. The administrators said the additional time is required to complete the remaining asset recoveries, deal with the director loan claims and address creditor matters.

Creditor claims remain broadly where they stood in March. Unsecured proofs received total approximately £60.6 million, compared with £19 million estimated in the directors' statement of affairs. The administrators said the increase continues to reflect counterclaims from project counterparties and insurer claims, while another 302 creditors with claims estimated at approximately £7.4 million in the statement of affairs have yet to submit proofs. None of the unsecured claims received has yet been formally agreed.

HMRC has submitted approximately £2.07 million of secondary preferential claims, up from the £1.70 million estimated in the statement of affairs. The administrators expect those claims to be paid in full, subject to a reduction for VAT bad debt relief, and anticipate making the payment within the next six months. They also continue to expect surplus funds to remain for unsecured creditors, although they said the ultimate dividend cannot yet be estimated and is unlikely to be significant given the scale of claims.

Read the administrators’ latest report here.