Down but not out?

On the face of it, all appeared to be going well. Established developers Alan Chatham and Mark Billingham who headed up BDC netted Brum's biggest office letting of 2009 with the Highways Agency taking half of the scheme's 110,000 sq ft office space and which was due to move in this May. A 'significant number' of the 244 flats had been sold and the shell and core of the city's first rooftop restaurant was nearing completion. Admittedly there had been talk in the market about the project running over budget, but this was hardly unusual for a scheme of this size.

A source close to the bank says that loan to value issues and the deterioration of the relationship between BDC/BuildAbility and Lloyd's business support team were to blame. The first part of this is hard to understand. Surely LTV issues would have been identified by the bank long ago?

My source couldn't say, but went on to reveal that: "Alan (Chatham) and Mark (Billingham) couldn't see eye to eye with Lloyds business support team. Lloyds had already invested £92m when the project was passed over from its local team in Birmingham to its business support team in London at the beginning of January. It's such a shame, the team is meant to give businesses support, not turn it off," he says.

All of which suggests to me that internal issues at the lender appear to loom large in the sorry turn of events. Did the local Lloyds team simply get its sums wrong? Did the national team not have the necessary expertise (or interest) to appraise the scheme properly? Or was there a change in lending policy of which BDC was an unwitting victim?

Whatever the case, jeopardising existing pre-lets seems to be a particularly cavalier move, with the Highways Agency reportedly reconsidering its options. An unnamed source says: "The Highways Agency had serious concerns in the aftermath of this news but its now looking positive, it still wants to go there."

This must make life a little easier for BuildAbility and BDC director Neil Edginton and BDC's Anthony McCourt who have been kept on by administrator PricewaterhouseCooper to help steer the 500,000 sq ft mixed-use scheme to completion. Men in high-vis jackets are now on site 24/7 in a desperate bid to get the project completed as soon as possible and PWC has confirmed that it will look to sell the building in about 12 to 18 months time to get the best possible result for creditors.

As for Chatham and Billingham, BDC was a special purpose vehicle created specifically for the Cube project so their other schemes, including The Mailbox, are unaffected, at least directly, by BDC's misfortune.

Indirectly, though, will the market treat them more cautiously? The duo paid £5m last summer for the Post & Mail site and hope to create another iconic development there for the city. What happens to those plans now remains to be seen.

One market observer says: "Alan & Mark paid for the building with equity. They're keeping a stiff upper lip and want to crack on with it, but has this business tarnished their reputation?"