Land purchase structured in an unusual and inventive way
In June 2015 Keith Ainsworth and Christopher Jones (of our Banking & Finance team) and Claire Waring (of our Development team) acted for a housing developer on a land purchase that had to be structured in an unusual and inventive way.
Our client (the “Purchaser”) entered into a land purchase contract in 2010 that obliged it to purchase land from a company (the “Seller”) in three phases; two phases had been completed already and the third constituted our transaction.
By the time of the purchase, the Seller (along with certain other companies in its corporate group (the “Affiliates”)) was at risk of insolvency, in part because of circa £13m of debt owed to a bank (the “Bank”) in respect of which it had long been in default. Consequently, the Bank wished to exit and was prepared to sell its debt at a deep discount. The Bank had other bidders for the debt, so our transaction had to be concluded as a matter of urgency.
Our transaction had to be structured so as to allow our client, the Purchaser, to acquire the third phase land (which had an agreed purchase price of £3.5m) whilst also relieving the burden of the Bank debt on the Seller. Our transaction therefore saw the following happen simultaneously at completion: