Hundreds of businesses are owed thousands of pounds after a

Bristol property developer racked up debts of more than £5.1

million.

Edward Ware Homes Ltd, which is based in Clifton, struck a

deal to keep trading after being hit hard by the slump in the

housing market.

The agreement means that the company can continue to trade

but more than 200 creditors – including plasterers, architects,

engineers and decorating firms – will get just £2.50 for every

£1,000 owed to them.

Company director Edward Ware, who established his first

building firm in 1997, blamed the problems on "an industry in

meltdown", and said that he and his colleagues were doing

everything in their power to resolve the situation.

He said: "As far as the directors are concerned we are

trying to do what is right by the people we owe money to, and

we are trying to be nothing but honourable."

Edward Ware Homes has experienced major problems in the last

12 months. Turnover has plummeted from £11.4m in 2007 to just

£673,000 this year, and the company has posted losses of £3.8m.

More than 60 per cent of staff have been shed, and in the last

three months four directors have been made redundant or

resigned.

In April it pulled out of plans to develop 400 homes at the

Greyfriars site in Gloucester and the company has moved offices

from Whiteladies Road to Oakfield Road, Clifton, and its

website and phone number are currently unavailable.

Facing a situation of owing more than £5.1m to 211

creditors, including 73 from the Bristol area, it entered into

a Company Voluntary Arrangement (CVA) on August 8, where money

is paid into a scheme so that its creditors are paid back a

proportion of what they are owed

The arrangement, set up through audit, accounting and

business services firm BDO Stoy Hayward, is to stop the company

going bust, and means businesses owed money will receive more

in the long term than they would if the company was liquidated

and its assets sold off.

But for now they will only get a tiny fraction of the money

owed to them, and will only get the rest if Edward Ware Homes

is successful in the future.

Nigel Boobier, a restructuring and insolvency partner at law

firm Osborne Clarke and chairman of the South West and South

Wales region Association of Business Recovery Professionals,

said such a small settlement arrangement was not unusual. He

said: "The reason for companies going to company voluntary

arrangements is usually because they have incurred debts that

they are unable to service and they foresee a situation where

they are unable to avoid insolvency.

"Sometimes the dividend is even smaller than 0.25p in the

pound. This amount is not unheard of when companies go into

voluntary arrangements, as creditors all look to the long-term

situation."

Among the local creditors, Yate-based electrical contractor

ECS (Bristol) Ltd is owed more than £15,800. Greenvale

Landscapes in Fishponds is owed £9,911 and Mark Breen

Plastering in Emersons Green is owed almost £24,000. A £1,500

debt to charity Meningitis UK has been settled.

The largest creditor out of pocket is Edward Ware himself,

personally accounting for more than 50 per cent of the debt. Mr

Ware, who was made a director of Bristol Rovers Football Club

in October, is adamant that the situation was unavoidable.

The 47-year-old, who lives in a £2m house near the

Suspension Bridge with his wife Suzanne, said: "The business

has in the space of 12 months gone from being solvent, with a

land bank of 1,400 plots with very significant future profits,

to something that has become insolvent virtually overnight.

"The problem is that land values have dropped by 100 per

cent. Existing stock – apartments and houses you are trying to

sell – has had to be discounted by up to 30 per cent. The

assets of the business have become worthless – less value than

the borrowings.

"The dilemma facing the directors was whether to put the

business into receivership or come to a voluntary agreement

with all the creditors with the view to holding some of the

assets until the market recovered sufficiently to build the

developments and sites on the books and pay people back in

full.

"The easiest thing would have been to throw the towel in and

walk away from it, but we all feel a responsibility towards our

trade partners and professionals. What we have done is to

protect the interests of our trade creditors and partners. What

is reassuring is that I personally account for over 50 per cent

of the debt. I was the majority shareholder and I kept putting

in money to keep it going – more than £2m – but there was no

end in sight. So it is in my interest as well as everybody else

to make sure that everyone is paid. What has happened has been

beyond our control completely. The industry is in meltdown.

"I think the creditors are grateful that the proposal is to

trade out of it rather than throw the towel in. The market will

return, whether it is next year or the year after."

Simon Girling, joint supervisor of the arrangement at BDO

Stoy Hayward, said Edward Ware Homes was one of many

housebuilders that had suffered because of the downturn.

He said: "The company continues to trade in its streamlined

state under the CVA, in order to organise the build out of its

various projects. It is hoped that the income streams deriving

from the successful completion of the projects will enable

payment of a substantial dividend to unsecured creditors when

the property market recovers."