URL: https://democracy.croydon.gov.uk/ieDecisionDetails.aspx?ID=2693

Decision Maker: Corporate Director of Resources (Section 151)

Outcome: Recommendations Approved

Is Key Decision?: Yes

Is Callable In?: No

Purpose: Brick by Brick Croydon Ltd (BBB)has now reached the end of its activities.  This paper, including the confidential Part B accompaniment, deals with the process of winding it up.  Specifically, as delegated to Corporate Director of Resources (S151 Officer) by Cabinet in February 2024, it proposes agreeing to write off £64.7m in loan balances owing by Brick by Brick to the Council, save for a £1m retained balance to cover unforeseen risks and to begin the process of handing the company to liquidators.   For the avoidance of doubt, the 2024/25 accounts contained a provision for the loss of £65.7m. This report therefore confirms the precise sum rather than representing a new charge to the general fund.   The Council will indemnify the Directors of Brick by Brick who were appointed for the purpose of bringing about orderly winding up of the company, from and against liabilities that they may incur or become liable to incur relating to their roles as Directors or employees of Brick by Brick and the running or the liquidation of the company. Details of the Directors’ Deed of Indemnity is provided within Appendix D.    The Council chose to proceed with the disposal route in July 2024, in line with the February 2024 Cabinet recommendation, as it would have delivered a quicker outcome towards detaching the Council from BBB. At the time of writing the February 2024 Brick by Brick Closure Report a party was already interested in acquiring BBB, however this process was expanded to include other interested parties. The process to dispose of BBB ran from July 2024 to December 2024. The sales process did not deliver the best financial outcome and the Council proceeded towards solvent winddown.   The Council agreed with BBB to pause interest charges against the loan facility from July 2024 as the Council pursued its disposal plan which required BBB to pause some activity related to sales and expenditure. Since 2025 BBB have repaid a total of £1.95m in loans, this takes it to a total repayment since the February 2024 report and upto July 2025 of £37.8m and £2.63m in interest income. The outcome is that there is a now projected loan balance of £64.7m, which it is proposed to be written off. This is better than the £c70m previously projected within the February 2024 report. At liquidation, £1m will remain as an outstanding loan balance as part of the solvent winddown loan, as explained in Part B.  

Content: Brick by Brick Croydon Ltd (BBB)has now reached the end of its activities.  This paper, including the confidential Part B accompaniment, deals with the process of winding it up.  Specifically, as delegated to Corporate Director of Resources (S151 Officer) by Cabinet in February 2024, it proposes agreeing to write off £64.7m in loan balances owing by Brick by Brick to the Council, save for a £1m retained balance to cover unforeseen risks and to begin the process of handing the company to liquidators.   For the avoidance of doubt, the 2024/25 accounts contained a provision for the loss of £65.7m. This report therefore confirms the precise sum rather than representing a new charge to the general fund.   The Council will indemnify the Directors of Brick by Brick who were appointed for the purpose of bringing about orderly winding up of the company, from and against liabilities that they may incur or become liable to incur relating to their roles as Directors or employees of Brick by Brick and the running or the liquidation of the company. Details of the Directors’ Deed of Indemnity is provided within Appendix D.    The Council chose to proceed with the disposal route in July 2024, in line with the February 2024 Cabinet recommendation, as it would have delivered a quicker outcome towards detaching the Council from BBB. At the time of writing the February 2024 Brick by Brick Closure Report a party was already interested in acquiring BBB, however this process was expanded to include other interested parties. The process to dispose of BBB ran from July 2024 to December 2024. The sales process did not deliver the best financial outcome and the Council proceeded towards solvent winddown.   The Council agreed with BBB to pause interest charges against the loan facility from July 2024 as the Council pursued its disposal plan which required BBB to pause some activity related to sales and expenditure. Since 2025 BBB have repaid a total of £1.95m in loans, this takes it to a total repayment since the February 2024 report and upto July 2025 of £37.8m and £2.63m in interest income. The outcome is that there is a now projected loan balance of £64.7m, which it is proposed to be written off. This is better than the £c70m previously projected within the February 2024 report. At liquidation, £1m will remain as an outstanding loan balance as part of the solvent winddown loan, as explained in Part B.   For the reasons set out in the report, the Part B report and its appendices and the delegations within the Brick-by-Brick Croydon Ltd Closure Report approved by Cabinet 14 February 2024, the Corporate Director of Resources AGREED to:   2.1 Approve, in consultation with Executive Mayor, Cabinet Member of Finance, Director of Legal Service and Director of Finance to the final loan principal write off, as provided within Appendix E, of £64.7m outstanding loan with BBB, at the point of liquidation.   2.2 Agree that the outstanding balance of £1m of the loan facility as advised within Part B be retained along with respective fixed and floating charge over the Company’s assets as registered with Companies House. This still ensures that BBB will be placed into a Members Voluntary Liquidation (MVL).   2.3 Note that the write off, as set out in recommendation 2.1 above, has been fully provided within the Council’s Accounts and Budgets. This write off will not result in any further financial impact for the Council Accounts.    2.4 Agree to place Brick by Brick Croydon Ltd into a solvent liquidation, formally known as Members' Voluntary Liquidation (MVL), and to enter into the Shareholders Resolution, as provided in Confidential Appendix A, to agree to the liquidation.   2.5 Agree, in the Council’s capacity has lender and shareholder, that the Directors of BBB can transfer BBB’s cash from their bank account to the Liquidator’s bank account as part of the solvent liquidation.   2.6 Agree, in consultation with the Executive Mayor, Cabinet Member of Finance, Director of Legal Service and Director of Commercial Investment & Capital (now Director of Procurement, Property and Capital), to issue the Deed of indemnity and Letters of assurance to Directors of BBB as drafted by Council’s legal advisors and presented within Confidential Appendix D, J and K.   2.7 Approve as  set out Section 8.10 and Appendix H, that the Council, in its capacity as lender/floating charge holder over the assets of Brick by Brick, waive the requirement for the Liquidator to give at least five days’ notice prior to BBB entering into a Members Voluntary Liquidation, and consent to BBB entering into solvent liquidation without the need to provide the five?day notice period.   2.8 Note that the Council will only benefit from any further proceeds once the Liquidators have settled all liabilities, claims and their fees. This is further explained in section 8.   2.9 Note that the BBB Board have agreed to proceed with the solvent liquidation with minutes and Board Papers provided in Appendix B.   Cabinet in February 2024 delegated to the Corporate Director of Resources to approve recommendations in relation to final winddown of BBB. This report now proposes the final actions and agreements that the Council will need to enter into to allow the Company to be placed into a Members' Voluntary Liquidation (MVL). This is a key decision as the loan write off is over £1m, above the Key Decision threshold.   The Council has considered an insolvent winddown and disposal of BBB. The insolvent winddown was not an ideal route as the Council would have placed the Directors at risk and also would not have extracted the same level of value as it has done so by reducing activity and making the company solvent.   Under an insolvent winddown the Company would have incurred considerably higher cost due to high fees charged by the insolvency practitioners.      

Date of Decision: April 1, 2026