£30m black hole at Liverpool property company behind cinema conversion

A property company set up to develop a former Liverpool cinema into city centre apartments has liabilities of over £30m.

Pinnacle Student Developments Ltd was behind the development of the former Odeon Cinema on London Road in Liverpool city centre. But the 488 bed scheme marketed as the Paramount stalled in 2015 and was not fully complete.

The Odeon, which first opened in the 1930s, closed in 2008. Pinnacle eventually entered administration  and investors who put deposits down on apartments at the site feared for their cash.

Now a report by administrators Quantuma LLP has revealed that investors have submitted claims for over £13m on the scheme.

It reads: "The company granted a fixed and floating charge to MVG Holdings Limited on 5 June 2017 who was owed £4,178.428 on appointment.

"The company also granted a fixed charge on 18 October 2013 to Pinnacle Student Buyers Limited, a company set up on behalf of the buyers who were owed c£13, 505,055 on appointment to represent their interest."

The same reports reveals the company has huge liabilities toward unsecured creditors.

It reads: "Unsecured claims were estimated at £14,247,539  in the Director's Estimated Statement of Affairs and to date claims have been received from unsecured creditors totalling £26, 186,872.

"In addition the joint administrators have received a claim from connected company Pinnacle Angelgate Limited for £2,072,237. which is disputed by the director."

The Paramount scheme was originally described as a “striking piece of architecture” when it was being actively marketed to Chinese investors in 2013.

A spokesman for the developers said: "We’re creating a video so those considering buying into the development will get a better idea of what it will be like.

“Our main market for investors is the Far East so this film will give them a feel for the area as they may never have been to Liverpool.”

The prices were £54,995 for pods – student rooms with a communal area – and £74,995 for studios. And, according to the Daily Post in July 2013, investors were being offered “an assured yield of 9% for five years”.

Student property company Bastion Estates said the Paramount Scheme “will be a fresh, contemporary piece of architecture adding a bold statement to Liverpool city centre and rejuvenating a very prominent site in the city”.

Bastion, a company that is no longer trading, said there would be an “assured yield” of 9% for five years.

An undated page on Pinnacle’s website says: “The development is on the site of the former Paramount Theatre, but there are no theatrics where construction is concerned.

"The contemporary 10-storey building, which is close to all three of Liverpool’s city centre universities, is set for completion in 2015 – and we are right on track to meet our target.”

In 2016 Pinnacle removed builders PHD1 Construction from the site over 'performance issues'. Pinnacle later said the issues surrounding PHD1 led to problems at the Paramount site. The Liverpool-based Elliot Group bought the Paramount site earlier this year.     

Elliot Lawless, who owns the Elliot Group, told the ECHO that he planned to complete the stalled city centre development.