Creditors demand examination of fit-out firm's financial performance in months leading up to collapse.
Administrators at fit-out firm Churchfield are scrutinising the role of directors after complaints from creditors over the firm's collapse.

Rothman Pantall administrator Nick O'Reilly, who is acting for the company, said: "There is a large body of creditors concerned as to the activity of the company's directors prior to administration." O'Reilly said the fact that cash-flow problems emerged at the firm in November, three months before the administrators were finally called, would be looked at.

He said: "To keep overheads such as the City office and staff on for three months was not the wisest of moves." O'Reilly said the firm's financial performance had slipped dramatically in the past 18 months. He said: "It was still in a reasonably healthy position in 1999." A group of at least 20 Churchfield creditors, including subcontractors, attended the application for an administration order two weeks ago, taking away control of the company from the directors. Creditors, both secured and unsecured, are understood to be owed in the region of £5m.

Joint administrator Deloitte & Touche, representing the creditors, refused to be drawn over its role.

A spokeswoman said: "We cannot say much at this early stage. We are looking into a number of different issues." Creditors' concerns led to two companies being appointed as joint administrators, one to represent the firm's interests and the other to represent creditors' interests.

To keep on overheads such as the City office was not the wisest of moves

Churchfield Administrator

One subcontractor said he and fellow creditors had fought for that outcome. He said: "We did not feel the administration order initially proposed by Churchfield's administrator was in our favour. It was the wrong thing to do." O'Reilly said he was holding onto a skeleton workforce of 10-12, although a decision on the future of those staff will be made in the next week. Administrators initially made 122 staff redundant.

The collapse of the firm led to other fit-out contractors being inundated with enquiries from former employees.

Rivals put the firm's collapse down to Churchfield's attack on the call centre and "internet hotel" markets that left it overstretched. A Churchfield source suggested that problems arose from £1.5m owed to the company for a London job.