We have spent this month reflecting on our recent assistance with a complex construction matter, which could have seen the loss of five multimillion pound projects.
We were contacted by PD*, a property developer, which was in the process of completing five high-end developments.
Whilst the projects initially ran into minimal problems, issues with the final value of the contracts on two of the sites put all the developments under threat.
PD was facing significant cashflow problems on these sites after the costs nearly doubled from £3.5 million to £7.4 million. As a result the company was unable to pay sub-contractors and was threatened with a winding up petition.
Lynn Gibson, our Managing Director at Gibson Hewitt, said: “When we were approached by the business it was clear that while three of the sites still offered strong profits, due to changes at the other sites the whole company was facing a significant cashflow crisis.”
With the help of Lynn the business was put into a Company Voluntary Arrangement (CVA), which allowed the company some breathing space from creditors.
Our team at Gibson Hewitt then set about ring-fencing funding for the subcontractors of the three successful sites, allowing work to go ahead.
Meanwhile at the other two sites a temporary line was drawn at the date of CVA and a manageable total sum was agreed for the build to be completed.
“It would not be over dramatic to say that without our help the future of all of the sites and the business as a whole was at risk,” said Lynn.
“While the company has lost out financially, thanks to our team they remain in operation and have completed work on the site.”
She strongly believes that there may be many more businesses out there struggling with debt and cashflow issues that needed similar help and is calling on them to seek professional help.
“With the right help at the right time most businesses facing distress can be saved, but business owners need to face the reality of their situation and seek help,” added Lynn.
* The business’s name has been anonymised to protect its identity due to the commercially sensitive nature of the work.