DeTrafford City Gardens Ltd

A technical issue has led to reduced realisations in the administration of DeTrafford City Gardens Ltd.

The company, which owns 27 units in the City Gardens residential development based in Manchester, entered administration in October 2022. It is one of five DeTrafford entities to have suffered this fate.

In their most recent progress report, Joint Administrators Lee Causer and Kerry Bailey of BDO describe how they engaged Boyes Turner to provide legal advice in relation to their ability to collect rents under various assured shorthold tenancy ("AST") agreements.

Prior to the administration, the company entered into common law tenancy ("CLT") agreements with some unit owners at the point they purchased the unit. The CLT granted the company the ability to let the unit out to a tenant using an AST. The AST would generate income to settle the liabilities of the CLT.

Following investigations, the Joint Administrators discovered that the ASTs for all unit owners are in a different legal entity name to the company. Boyes Turner has advised that, as a result, the company in administration is not party to the agreement and therefore cannot receive rental income in relation to the properties.

The Joint Administrators also describe how they have received five bulk offers for all or substantially all of the units. Sandersons was engaged to review the offers, and they have provided a recommendation to proceed with one bulk offer. Contracts have been issued with the proposed purchaser, who is currently undertaking due diligence.

The Joint Administrators' latest progress report can be found HERE.