Architect set to recoup up to 43% of debt from Abu Dhabi job
Creditors to beleaguered architect Austin-Smith:Lord may receive up to 43% of their money back, more than previously expected according to the firm’s accountants.
The firm was forced to enter a company voluntary arrangement (CVA) to stave off insolvency in November 2011 after its Abu Dhabi client Adach refused to pay £11.5m in fees for work on Qasr al-Hosn cultural quarter in Abu Dhabi.
The firm is still owed £4m by the client but is close to reaching a settlement which would see it paid £1.9m of the money, according to an annual summary of progress on the CVA prepared by the firm’s accountant BDO. The firm had previously been offered just £1.5m by Adach in March 2012.
However, the summary, sent to creditors, estimated creditors could now see up to 43% of their money back but that this would fall to 32% if a series of legal claims by former staff are successful.
Neil Chapman, director at Austin-Smith:Lord, said that he felt the process was entering the “end phase” despite the settlement not yet being signed.
“Obviously we have been working hard to get what we could out of Adach for the benefit of all creditors,” he said.
The 14 staff who were made redundant when the firm closed its Abu Dhabi office in the wake of its financial trouble are claiming £418,000 in money owed to them and the firm is also facing a succession of unfair dismissal claims by UK employees which it estimates could cost it up to £1.3m
Employees in the UK have now had all their holiday pay, pension claims and back pay settled under the agreement.
Unsecured creditors have already received 10% of their money back as an interim payment.
David Gilbert, joint administrator of the CVA, sent the letter to creditors in early December but it was filed at Companies House late last week. He said: “I anticipate making a second interim distribution to unsecured creditors from funds in hand of c.5-8p in the pound within the next two months.”
The letter also noted that engineer Arup, which is owed £1.8m for work on the project, is negotiating directly with Adach.