Inside The Legal Battle Over A £350M Loan Default Tied To RoyaleLife Collapse

One of the biggest real estate collapses of the current cycle has led to a legal row between a major European real estate debt fund manager and one of the world's biggest property agencies. 

Toronto-based property services giant Avison Young has filed a defence in the legal battle over the valuation of huge portfolios of holiday homes, part of the RoyaleLife Group, which fell into administration owing hundreds of millions of pounds.

Debt fund manager ICG filed a legal claim in the high court against Avison Young last year, claiming that it had breached its contract and was negligent when it produced valuations of the portfolios, against which ICG lent close to £350M. It said Avison Young had produced valuations that overstated the value of assets by as much as 210%.

In its defence, Avison Young said that it had not been negligent and had undertaken its duty as a valuer competently. It argued that ICG did not make a loss on its loans and that if it did, it was because the lender had been negligent and made risky loans in a niche sector. 

Documents filed as part of the legal case provide details about RoyaleLife's collapse that have not previously been made public, including which companies ran the rule over a possible purchase and the fact that ICG lent the ultimate buyer the entirety of the purchase price as part of the deal. 

The amount in damages ICG is claiming is not yet certain because it is still the lender to the portfolios, and the exact amount for which they will one day be sold isn’t yet clear. 

But it said in its claim that the value of the caravan and bungalow parks against which it lent, which were owned by RoyaleLife Group and once worth hundreds of millions of pounds, have fallen significantly in value. 

“Avison Young is aware that ICG is bringing a claim against AY in relation to the collapse of the failed RoyaleLife business,” a spokesperson said in an emailed statement. “AY intends to fully defend this claim. We do not consider it appropriate to comment further at this time.”

ICG declined to comment. 

The claim relates to loans made by funds managed by ICG to companies in the RoyaleLife Group, set up by entrepreneur Robert Bull to develop and manage caravan and bungalow parks across the UK, targeted particularly at older buyers and renters. Bull grew the business from scratch, and before its 2024 collapse, he appeared on the Sunday Times Rich List with an estimated worth of £1.9B. 

ICG provided two loans in 2018 and 2019 to companies controlled by the Bull family under the RoyaleLife brand. They were secured against 32 parks, with the combined debt coming to £349M, the legal claim form shows. 

The loans were intended to refinance existing debt facilities and provide capital for expansion. Bull's company bought existing holiday parks and redeveloped them, building bungalows and caravans targeting retirees and older customers. Some were rented out, but selling units was the main source of income for the company. 

When the pandemic hit, sales dried up, and the companies to which ICG had lent weren’t able to make all of their capital and interest payments. ICG agreed to extend the loans into spring 2021, and then again into 2022, as well as capitalising the interest owed, while RoyaleLife sought a sale or refinancing of the business. 

The claim form provides details on the travails of RoyaleLife that have not before been made public. They show that a sale to Pimco in 2021 got to an advanced stage but didn’t proceed, and in the same year, Blackstone, Brookfield and M&G were invited to bid before the process was opened out to 15 bidders. 

U.S. REIT Sun Communities entered into an exclusivity agreement in October 2021 for a deal that could have seen it buy some or all of the RoyaleLife business, which also had other lenders, in a transaction that ranged from £265M to £545M. But that deal fell apart over the valuation. 

Lenders including Morgan Stanley and Oaktree Capital Management provided offers of finance, but by mid-2023, no solution could be found. In March 2023, another company claimed it owned parts of six of the sites against which ICG had lent because it had provided Bull with a junior loan. To protect its position, ICG put the companies over which it had security into administration in August 2023. 

The portfolio against which it had lent was again put up for sale, the claim form said, but no buyer for the whole could be found at an appropriate price. ICG didn’t want to break the portfolio up for fear that the best parks would be cherrypicked. 

In late 2023 and early 2024, a deal was completed for Ambassador Group, a Scottish property company owned by investor David Gaffney, to buy the parks and manage them on behalf of ICG. Ambassador paid £299M for the 32 parks, but ICG lent it the entire purchase price, a later court document showed, the first time that information has been made public.  

Ambassador has rebranded the parks under a new name, Regency Living, and will manage the sites and sell them off over time. Bull was declared bankrupt by a UK court in December 2023.

ICG said that once the assets are sold to a new company, it will know exactly how much of a loss it has made. But it said it had already made a loss because of the value at which it sold the parks to Ambassador. 

In its defence to the claim, filed at the high court in June, Avison Young said that the figures provided by ICG on how much it had lent and the price paid in the sale to Ambassador meant that ICG had actually made a £15M gain on the deal, and that if any losses arose on future sales, that had nothing to do with the valuation advice it gave. 

In its claim, ICG said that Avison Young had been negligent in several different ways. 

One of its arguments was that Avison Young had valued the parks in the portfolio on the basis that they could be redeveloped but had overestimated the density of units that could be achieved. ICG claims Avison Young relied on information from RoyaleLife when analysing potential redevelopment densities. 

Another argument was that the valuer overestimated the price at which completed units could be sold and the rate at which they would be sold, which had a significant impact on the value. As an extension of this argument, ICG said Avison Young didn’t take into account that RoyaleLife was one of the big buyers in the market and couldn’t buy from itself — thus deals where it was the buyer shouldn’t be used as a comparable. 

Between the first loan and the company going into administration, Avison Young provided seven valuations on various parts of the portfolio against which loans were secured, and ICG said those overestimated the value by various amounts, ranging from 43% to 210%. That falls outside the bracket that could reasonably be expected from a competent valuer, its claim says. 

Avison Young denied that it had been negligent in the valuations. Where it had relied on information from the borrowers, that was reasonable, and ICG knew it was using that information and was happy for it to do so, it said. It reached its estimates of sale prices and rates competently, it added. 

The defence argues that the bracket of potential valuations was a wide one because the caravan and bungalow sector is niche, opaque and still nascent, and thus the amount of comparable evidence is limited. For that reason, the valuations it came up with were not unreasonable. 

It went further, saying there was an argument for contributory negligence on ICG’s part — that ICG’s behaviour played a big part in any loss that might occur. 

It said that among other things, ICG had not adequately taken into account the track record of the borrowers, which included bankruptcies in previous businesses, or properly scrutinised the financial position of the companies to which it was lending.

More broadly, it said that ICG undertook loans at a high loan-to-value ratio, and as a company with a specialist real estate team, it should have known the risk it was taking. 

In a response to the defence, filed in late July, ICG denied the contributory negligence claim. It said it took account of the value of the security against which it had lent, but it also undertook a detailed investigation of the borrowers. 

It said that although the loans it provided were high-yield — meaning the LTV ratio was higher and, in return, the borrower pays a higher interest — the LTV at which it lent was not excessive.