Ensuring the Best Outcome for All Parties

In February 2014 P&A were appointed as administrators of an SME demolition contractor. The contractor had a turnover of circa £3m but as a result of competitive tendering through the downturn in the market, profit margins became un-sustainable. Following thedelay of a number of large contracts, the forecast turnover was heavily affected and the company fell insolvent.

On review of the contract debts it became apparent that a number of the debts could be effectively secured by implementing novation agreements with the debtors. One of the largest debtors was Carillion, who following negotiations signed up to a tri-partite novation transferring the contract over to newco. This secured a payment of the debt due up to P&A’s appointment and there was no disruption to Carillion and newco secured valuable turnover.

A number of the remaining debtors were proven to be slightly more difficult as while the provisions of contract following an insolvency event had been administered by both P&A and the debtors, the valuation of the contract works was disputed. With no intimate knowledge of the day to day events on site, P&A investigated by employing a third party professional who had been involved on the projects. Now appointed, our consultant is drawing on his knowledge of the works to effect rational arguments to discredit the debtors valuation of the works and where applied, claims for set-off. This strategic move by P&A will secure a far greater realisation of the debt and thus improve the position for the creditors of the company.

By recognising that on occasions its advantageous to draw on the intimate knowledge of third parties and also facilitate novations where possible, we can ensure the best possible outcome for not only the creditors to the company, but also the debtor and when applicable newco.

For more information on how P&A can help your organisation secure contractual debts in the construction and engineering sector, please contact;Tim Wheeler, +44 (0) 114 275 5033, t.wheeler@thepandagroup.com