THIS enormous hole in the ground is the result of a disastrous land deal made at the height of the property boom - without a penny of funding in place.
Velocity Group planned to develop the plot on Northumberland Road in Crookesmoor, Sheffield, and build a multi-storey car park serving nearby hospitals.
It was so eager to secure the lucrative site it paid a £250,000 non-refundable deposit, before spending £745,000 on enormous excavations and access work.
But the firm neglected to pay £900,000 it owed to more than 30 firms of sub-contractors working on projects across the city including the 445-apartment Velocity Village at West Bar and the landmark Velocity Tower at St Mary’s Gate in Sheffield.
Eventually G&P Building and Plastering of Ecclesall Road, which was owed £192,000, petitioned court, the Official Receiver was called in, and Velocity Group was put into compulsory liquidation.
An investigation by the Insolvency Service found Velocity Group directors Steven Wells and Ian Sivell had signed a £5m deal to buy the Northumberland Road plot, without having finance in place to buy it.
It also revealed the firm had made a string of payments worth £1.1m ‘to the detriment of creditors’ including a £350,000 overpayment to Sivell’s firm, Sivell Engineering, and two payments totalling £50,000 to Wells - who transferred a further £150,000 to his parents.
In the last few weeks Wells, aged 46, of Graham Road, Nether Green, and Sivell, 50, of Burnt Hill Farm, Burnt Hill Lane, Oughtibridge, have accepted nine-year bans for unfit conduct following a three-year investigation.
G&P, which employed up to 50 people, has gone under.
Denise Brown, the Official Receiver for Sheffield, said Velocity Group owed creditors £2.3m, it had spent £1.1m on land it had no prospect of owning, and there was no paperwork for payments totalling £1,154,553.
A liquidator has been appointed to try to recover some of the cash.
Denise Brown said: “Basically they took money out of the mouths of sub-contractors. They never had any prospect of owning Northumberland Road. Presumably there were talks going on in the background, but there was no funding in place to buy it.
“Wells and Sivell were allowing Velocity Group to recklessly spend £1.1m on the project without security, a contract or funding.
“Payments were going all over the place, some went abroad, one went to Wells’ parents, but we can’t find any paperwork and they can’t explain why.
“You can be reckless if it’s your money, but it wasn’t. Neither of them is out of pocket as a result of all this.”
Ian Sivell said the Insolvency Service had received all the paperwork necessary to explain Velocity Group’s transactions and there were no overpayments.
The company had had a “written offer” from a bank to buy Northumberland Road, but it was withdrawn when the financial crisis hit in 2008. It had never traded insolvent and was owed millions for work done, he added.
And he only agreed to the disqualification because he was unable to afford to defend himself in court, he said. “It’s been heartbreaking for me.”
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