UK taxpayers have lost £2.6m due to the collapse of modern methods of construction (MMC) specialist Modulous, which has now gone into liquidation.
The startup, which was formed in 2018, filed a notice of intention to appoint administrators in January, having laid off its staff at the beginning of December.
Its liquidation was formally confirmed last week.
A statement of affairs document filed with Companies House shows that it owed a total of £6.2m to creditors and it only had just over £7,000 in recoverable assets.
The total it owed included £1m to 71 trade creditors and £1.4m to 60 employees.
HMRC has been left out of pocket to the tune of just under £1m – related to outstanding PAYE payments.
UK Government-sponsored body Innovate UK, a subsidiary of UK Research and Innovation, was the largest creditor. It was owed £1.6m from loans it had provided.
According to its website, Innovate UK loans “aim to provide flexible and patient capital to support business growth through innovation”.
It adds: “We help innovators marshal the personal, business, academic, financial and technical know-how that turns ideas into commercial realities.”
Modulous had only £7,397 available to pay all creditors, including secured lenders such as Innovate UK.
US-based venture capital investor Blackhorn lost £400,000 as a result of the liquidation of the MMC firm.
London-based Modulous offered a kit of parts and automated feasibility study software. It described itself as “the first globally scalable solution to the housing crisis”.
The company said its “asset-light” business model was a way of avoiding high upfront costs that had plagued other modular firms.
Modules in the firm’s kit of parts were manufactured at existing factories owned by other companies, flat-packed and then delivered to site for assembly.
In October 2023 it launched a software programme called TESSA, to estimate costs and generate designs for housing on specific plots of land.
Modulous announced it had raised £10m of Series A funding in September 2022, with investors including Regal London and Cemex Ventures. However, in its latest accounts, for the year to 31 December 2022, it reported a £10m pre-tax loss on a turnover of just £92,000.
The company only had one project underway – 12 council homes in Romney Avenue, Bristol (pictured).
Opus Restructuring, which is handling the affairs of Modulous, and Innovate UK were both approached for comment.
A raft of offsite construction specialists have gone out of business in recent years, including Caledonian Modular, Ilke Homes, Eco Modular Buildings, Mid Group and House by Urban Splash, while Legal & General Modular Homes was closed by its parent company. Lighthouse appointed administrators earlier this month.
The investment strategy of Homes England was questioned by the House of Lords built environment committee after it lost money on both House by Urban Splash and Ilke Homes. The agency’s chief executive Peter Denton defended the Ilke Homes investment in an interview with Construction News, published on Wednesday (10 April).
“We were doing our job, which is to intervene when the market isn’t providing,” he said.
