Festival Housing (Festival) and Worcester Community Housing (WCH) wanted to enter into a new group structure to unlock a range of benefits including “additionality” (significant cost savings, achieving efficiencies in service delivery, using their combined capacity to access new funding, growing their building maintenance business), enhancing their offering to their communities through scale, and creating an organisation more resilient to risks.
WCH was a stock transfer association (approximately 10 years post-transfer) and Festival was a group comprising housing stock from three stock transfers, along with a diversified business structure including a cost-sharing group formed with Rooftop Housing Group (Rooftop) for the delivery of repairs and maintenance services.
We acted as lead legal advisers on the Project for both organisations, and carried out due diligence on both organisations (at that time, the Regulator accepted this subject to evidence that the due diligence process was robust and sufficiently independent). We also advised on changes to the cost-sharing group between Festival and Rooftop to admit WCH and the new Group Parent (Fortis Living) as members.
As well as advising both WCH and Festival on the grouping process, and carrying out the due diligence on both organisations, we devised a bespoke governance structure for the three RPs (Fortis, Festival and WCH) that enabled them to function as efficiently and effectively as possible.
One of the key aspects of the project was to ensure that WCH could benefit as a member of the cost-sharing group between Festival and Rooftop, whilst not prejudicing the VAT recovery arrangements for Rooftop.
Having advised on the formation of the cost-sharing group two years previously, we reprised our role in the context of the group structure, adapting the corporate structure of the cost-sharing entity to introduce new members and to accommodate Fortis’ new governance structure. This required not only a detailed knowledge of the complexities of cost-sharing arrangements, but we also needed to draw on our extensive expertise in procurement and employment arrangements to ensure that the cost-sharing arrangement sat comfortably within the Fortis group and its other activities, particularly diversified ones.
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