Two former directors of collapsed East Sussex modular housing specialist Boutique Modern have agreed a pre-pack rescue deal with administrators that see parts of the business continue trading under a new name.

The pair paid £24,000 upfront and have also committed to paying between 0.5% and 1% of the remaining contract value on any schemes successfully novated to the new company.

Those payments will only be made on practical completion of each project and only where the schemes are profitable.

The latest administrators’ report reveals the deal will still leave a £4.3m black hole for trade creditors, with insufficient funds expected to be realised to make any meaningful return.

The assets of Boutique Modern have been sold out of administration to BM Modular, a newly-formed vehicle backed by founding directors Neil Eckart and Lucas Shone.

Phil Harris and Neville Side of FRP Advisory were appointed joint administrators on 27 October and completed the pre-pack sale later after staff were laid off.

Based in Newhaven, Boutique Modern operated as both a main contractor and modular manufacturer, delivering energy-efficient housing projects across the South of England using modern methods of construction.

The business ran into serious financial trouble following disputes linked to legacy contracts, which administrators said placed unsustainable pressure on cashflow.

Joint administrator Phil Harris said the sale offered the best outcome available.

“Boutique Modern has built a strong reputation for delivering sustainable, affordable housing solutions through innovative modular construction.

“While challenges arising from a historic contract created financial difficulties, this transaction secures continuity for the business, protects jobs and supports the delivery of much-needed homes across the region.”