Big-name investors like Fortress Investment, TDR Capital, Legal & General and Homes England are facing potential losses of nearly £500M after the collapse or closure of three of the UK’s best-known modular homebuilding companies.

A progress report from administrators to Ilke Homes said that the company collapsed owing creditors £320M, Construction Enquirer reported.

Of that, £249M was to unsecured creditors, including £226M in intercompany debts owed to equity investors in the company. Its main backers were private equity firms TDR Capital, Sun Capital and Fortress Investment.

Homes England is also facing losses, having lent the company £68M.

Urban Splash’s modular homes business went into administration in May last year. A progress report from administrators to the company published in June said that claims from creditors of £43M had been received, including about £10M from Sekisui, the firm’s Japanese JV partner. The report said it was uncertain how much would be available to distribute to creditors.

The third major setback in the sector in the last year was the closure earlier this year of L&G Modular Homes by pension fund giant Legal & General.

Accounts filed at Companies House showed that in the five years between 2016 and 2021, the division lost a combined £151M. The head of the division, Rosie Toogood, stepped down as a director in July.

While the sector is not dead, it needs to find a way of overcoming a Catch-22 that has beset many startup sectors, experts told Bisnow earlier this year: It's not profitable if it can't scale, but it can't scale if it's not profitable.