£3.8m Rescue Bridge Loan After Contractor Insolvency Threatens Completion
Cohort Capital provided a £3.8m contractor insolvency bridging loan to refinance a maturing development facility and fund the final stages of a residential scheme in London, following disruption caused by contractor insolvency and disputes with professional advisers.
The Situation
The sponsor is a London residential investor who has owned the subject property since 2010, having sold the lower units on long leases while retaining the freehold. Following planning permission for a roof extension, they progressed a scheme to construct five luxury new-build apartments above the existing structure – one to three-bedroom units ranging from approximately 600 to 1,485 sq ft.
The sponsor brings extensive experience in London residential investments, with a long track record across acquisitions, asset management and development.
The Challenge
The project faced significant disruption following contractor insolvency and disputes with professional advisers. Despite construction being near completion, the distressed position meant the existing lender’s development facility was maturing before the works could finish – creating a critical funding gap.
The sponsor needed a lender able to act decisively within a tight deadline, provide structured drawdowns to fund the remaining works, and replace the existing facility without delay. Standard lending channels could not respond with the speed or flexibility required.
Security Package
The facility was structured against a cross-collateralised portfolio of four assets, providing Cohort with diversified security and meaningful downside protection at a conservative 56% LTV.
Cohort’s Approach
Cohort Capital assessed the transaction on its fundamentals: an experienced sponsor with a proven track record in London residential, a near-complete scheme, and a well-secured portfolio of assets. The disruption caused by contractor insolvency was treated as a temporary setback rather than a structural failing, and the facility was designed to resolve it.
The facility enabled the sponsor to repay the existing lender, create the breathing space required to appoint and settle with a new contractor, and allocate £700,000 to complete the remaining works to practical completion.
Recognising the construction risk that remained following prior contractor failure, Cohort structured the facility with staged drawdowns monitored by a quantity surveyor, alongside cross-collateralised charges across the four-asset portfolio. This approach provided both oversight of the completion process and strong downside protection for Cohort.
From underwriting to completion, the transaction completed in just two weeks — providing the speed and certainty the sponsor needed against the maturing facility deadline. Upon practical completion, the borrower will refinance the completed portfolio onto long-term Buy-to-Let facilities.
Read the press release here.
Key Outcomes
- £3.8m contractor insolvency bridging loan structured and completed in two weeks from underwriting to drawdown
- Maturing development finance facility repaid in full, resolving the sponsor’s immediate deadline
- £700,000 allocated to fund remaining construction works through to practical completion
- Cross-collateralised security across four assets structured at a conservative 56% LTV
- Staged drawdowns with quantity surveyor oversight to manage completion risk and protect all parties
- Clear exit strategy established onto long-term Buy-to-Let finance upon practical completion
This transaction exemplifies the type of bridging solution we specialise in at Cohort Capital: time-sensitive situations that require both sophisticated structuring and rapid execution. The sponsor approached us with a redeeming facility, a partially completed development, and a history of disruption following contractor insolvency. What made this deal particularly compelling was his experience in the London residential market and a proven track record of successful exits. While this experience provided confidence in delivery, it could not fully eliminate the risks associated with prior contractor failure. Accordingly, we structured the facility with cross-collateralised security to strengthen downside protection. Ultimately, this deal reflects our core philosophy: backing experienced sponsors with strong fundamentals through flexible, pragmatic financing that helps them navigate temporary disruption and reach the finish line.
