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Leeds high rise pioneer developer goes into administration

It lost £50 million of potential foreign investment because banks were not willing to match the funding. It is the first time that a well known developer has been so outspoken in terms of showing that despite public announcements to the contrary banks are simply not lending to businesses.

Leeds based KW Linfoot said that its Lumiere and Manor Mills joint venture schemes in Leeds and Manyoo in Manchester remain unaffected by the administration and will be taken over by the company's joint venture partners.

As part of the ongoing development of these schemes the KW Linfoot team will continue to manage their construction, sale and legal completion.

It said it took the decision after finding its dealings with banks 'increasingly difficult due to a complete withdrawal of development funding to enable it to progress new schemes'.

It accused the banks of 'strangling' its business and that despite the downturn it had continued to see rental demand for its existing properties. But the reduction in mortgage products had made it difficult for purchasers to buy apartments off-plan.

'In taking this action the banks have effectively strangled the business and denied it any opportunity to trade through these difficult times,' the firm said in a statement.

'The board of KW Linfoot recognised the problems in the market and UK banking sector some 12 months ago and since then have been actively seeking alternative funding routes,' it continued.

'It has identified a significant appetite from overseas investors who remain very enthusiastic about investing in the UK and have been willing to invest up to £50 million into KW Linfoot schemes. Unfortunately the lack of bank funding to match their investment has resulted in potential deals falling through,' it concluded.

KW Linfoot singled out its own corporate banker as a notable exception that supported the business continued until it became clear that the administration was the appropriate route.

The group said it had worked extremely hard to reduce the impact on suppliers, contractors and professionals. It reduced expenditure by reducing staff numbers from 34 to 10, cut outstanding creditors progressively on a pro rata basis over a number of months and took steps to protect ongoing developments and money invested by the general public.

Gary Blackburn and Paul Whitwam of BWC Business Solutions in Leeds have been appointed administrators. Law firm Irwin Mitchell is providing legal advice.