Lease-based provider entered insolvency process, says RSH

Similarly to concerns outlined by the RSH in November, Larch “continues to be unable to achieve its income forecasts”, placing “significant stress on its cashflow” and leaving it unable to meet its lease obligations “as and when they fall due”, the regulatory notice said.

This situation “has been ongoing for a significant period”, it added, with Larch “currently reliant on the continued support of its head landlords forgoing lease payments in order to continue to trade”.

“In May 2020, creditor action taken against Larch led to the provider entering into the regulator’s insolvency process and the commencement of a moratorium,” according to the notice.

“A combination of subsequent creditor forbearance, and actions taken by the provider, meant that the creditor action was withdrawn. However, this is a serious failure.”

The insolvency processes were therefore halted, giving Larch “a short period to further understand its viability position and to work on restructuring its business plan” – but this breathing space “is reliant on continued forbearance and support of its creditors”.

Larch becomes the second lease-based provider to have entered the regulator’s insolvency process, after creditor action against Westmoreland Supported Housing triggered the proceedings for a short period in July 2019.

Eleven lease-based providers have been declared non-compliant by the RSH since February 2018.

Larch remains non-compliant with governance and viability standards, the RSH said. No regulatory judgement has been issued because Larch has fewer than 1,000 homes.

The association’s board has committed to working with the regulator to address its underlying problems, the RSH said.

A spokesperson for Larch said: “Larch has always strived to provide the highest quality accommodation and housing management services for its tenants who are some of the most vulnerable in society.

“Although we continue to experience cashflow challenges, we are working flat out to resolve them and we currently have the support of our main creditors.

“We also recognise that we have failed to adequately address the regulator’s concerns, therefore we recently recruited a new chair with extensive experience of Larch’s business model and the regulatory framework.

“In addition, we will continue to work constructively with the regulator until we achieve compliance with all the standards.”

An interim regulatory judgement was also issued for Eastlight Community Homes, which was formed through a merger between Colne Housing and Greenfields Community Housing on 1 July.

The Essex-based landlord was given a regulatory rating of G1/V1 – the highest available grades for governance and financial viability.

Emma Palmer, chief executive of Eastlight Community Homes, said: “This interim judgement follows the great work carried out by our people to successfully create Eastlight Community Homes.

“We look forward to working with the regulator as we continue to develop our trailblazing resident-focused Community Gateway Association.”

Update: at 12.32pm, 24/07/20 a comment from Larch was added to the story.