Council to give more money to developer that helped cause bankruptcy

By Tara O’Connor, local democracy reporter

Croydon Council could give another £10million to developer Brick by Brick.

The company, which was set up by the council in 2016, is set to be closed down as the authority faces a financial crisis.

Brick by Brick has already been lent £200million by the council and the company is part of the reason the council had to declare effective bankruptcy at the end of 2020.

Before it closes down, it is set to complete 29 developments that are under contract, most of which are set to be finished by October this year.

But for this to be possible the council could give the company up to £9.9million more.

The decision was made following an independent review of the company by PriceWaterhouseCooper (PwC) – this was managed by Chris Buss, former director of finance and deputy chief executive at Wandsworth Council.

At a cabinet meeting on Thursday, February 18, Mr Buss said he understands the public being sceptical about giving the company more money.

He said: “It is effectively the equivalent to having a bank overdraft, it is a cash flow requirement.

“There is a significant value in the sites being developed by Brick by Brick this year, however in order to get to that point a small additional increase in loan is required.”

It is hoped that by loaning the company more cash, flats currently being built will be sold to pay off some of the debts.

The amount of money made from each development and when they will be sold has been worked out by Mr Buss.

He added: “It is adequate based on the information we have at hand, there is one big indeterminate and that is the level of sales.

“If that doen’t come in when it is expected to there could be cash flow issues.”