Two former directors of East Sussex modular housing specialist Boutique Modern, which has collapsed, have struck a pre-pack rescue deal with administrators that will allow elements of the business to continue operating under a new name.

The duo paid £24,000 upfront and have also agreed to contribute between 0.5% and 1% of the remaining contract value on any projects that are successfully novated to the new company.

These additional payments will only be triggered on practical completion of each scheme and only if the individual projects generate a profit.

However, the latest administrators’ report shows the transaction will still leave trade creditors facing a £4.3m shortfall, with insufficient realisations expected to deliver any meaningful return.

Boutique Modern’s assets have been sold out of administration to BM Modular, a newly incorporated entity backed by founding directors Neil Eckart and Lucas Shone.

FRP Advisory partners Phil Harris and Neville Side were appointed joint administrators on 27 October and completed the pre-pack sale shortly afterwards, following the redundancy of staff.

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

The company encountered severe financial difficulties after disputes relating to legacy contracts, which administrators said placed unsustainable pressure on cashflow.

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

He said: “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.”