Lloyds Banking Group has used the ‘pre-pack’ administration process to restructure one of the largest private property developers in south-east England as it works through the legacy of the former HBOS problem loan book.

 Lloyds will become a major shareholder through swapping its debt for equity in a new company, Brookgate, created to develop the most promising schemes owned by collapsed Cambridge-based Ashwell Property Group. These include mixed-use schemes CB1, the 25 acre, £800million 1.7m sq ft development in Cambridge, and Chilton Woods, a 300 acre £350 million mixed-use property in Sudbury, Suffolk.

David Crawshaw and Richard Hill of KPMG were appointed administrators to Ashwell on Tuesday. Brookgate this week bought out most of the assets from administration. Lloyds, which was the major lender to Ashwell through its HBOS arm, has agreed a new debt finance package to provide working capital for Brookgate. Lloyds will be an investor and shareholder in Brookgate, alongside former Ashwell directors Sven Topel and Jon Wooles, who will act as Brookgate’s chief executive and finance director respectively.

Brookgate, has taken on eight remaining Ashwell staff, and has also appointed Colin Rutherford as non-executive chairman. Rutherford holds several senior board positions in the UK, including Midas Capital.

The financial details of the process have not been disclosed in detail, but Ashwell's net worth had been wiped out by revaluation losses. It's latest accounts showed a balance sheet deficit of £118.9 million, some £30 million of which was owed to collapsed Icelandic bank  Kaupthing Singer & Friedlander  to buy the Chelmsford site, and the balance to HBOS.

Paul Thwaites, the founder and 98% owner of Ashwell, made a graceful exit as Chairman last week, but by then it's fate was sealed, as this matter had been in train for a year and Brookgate was formed at the end of October. Thwaites, 55,  joins the ranks of former property players who have dropped from the Sunday Times Rich List, in his case from 397 in 2007 and a net worth of £180million.