Questions over whether DEGW kept creditors informed over worsening financial position

Creditors of failed architect DEGW have asked liquidators to investigate directors of the company for failing to warn them that the company might not be able to pay its bills

As part of a “pre-pack” administration deal, the architect was sold to Davis Langdon on 31 July 2009 for £178,000 - a sum not disclosed at the time - and
in March this year went into liquidation owing £3.9m.

Liquidators look into the circumstances of liquidation as a matter of course. Ian Vickers of FRP Advisory, one of the liquidators, said he would be examining the conduct of some of the directors of DEGW UK in the 12 months before it entered administration, after creditors raised concerns at a meeting in March this year.

Was full information about the company’s position given to the creditors?

Ian vickers, FRP ADvisory

Creditors had questioned whether DEGW had kept them informed about its deteriorating financial situation.

“Was full information about the company’s position given to the creditors? Should they have wound it up earlier?” asked Vickers.

The investigation will seek to establish whether there is any evidence of wrongful trading, a civil offence whereby a company continues to trade when there is no reasonable expectation that creditors can be paid.

A creditor at the March meeting said that a group of about six creditors had expressed “quite vociferously” that they were “surprised” when the company had gone into administration. “Clearly it was a shock,” he said.

There are around 500 creditors, and an administrators’ report at the end of January said £3.9m was owed to unsecured lenders.

FRP Advisory said a payment would be made to creditors in the “near future” but did not give details as to the amount.

A Davis Langdon spokesperson said: “It is not appropriate to comment at this point.”