Building investigation reveals that fit-out group went into receivership last month owing subcontractors £3m
Fit-out group Curzon went into receivership last month owing its bank about £11m, a Building investigation has revealed.
Curzon's bank, Lloyds TSB, pulled the plug on Curzon because of its volatile overdraft. Combined with other debts, it owes Lloyds TSB £11m.
It is also understood that:
- The company got into problems because of money lost on contracts in Brighton and Dundee
- A rescue package collapsed the day before it went into receivership, because a bondsman in the Isle of Man decided against guaranteeing the company £2m
- Former Curzon employees estimate that the company's subcontractors are owed £3m for work they did before receiver Ernst & Young was called in on 7 March.
However, the bondsman reneged on an agreement to put up £2m to guarantee its overdraft facilities, leading to the collapse of the proposed deal.
David Freeborn, Curzon's then-chief executive, said: "Any deal isn't done until the ink is on the paper. We thought that we had a deal, but it didn't get signed."
The company's problems revolved around contracts on the conversion of a jute mill in Dundee and the redevelopment of a technical school in Brighton into a block of flats.
Both schemes were completed before Curzon collapsed, but the company was cash-strapped. It had attempted to recover £2m from the Dundee contract and at least double that in Brighton, having argued that there were a large number of design variations on both schemes.
The company only recovered £250,000, and its lack of working capital meant that it had little room for manoeuvre when its largest framework contract, British Telecom's 21st-Century Network upgrade programme, was delayed.
It is not entirely clear how much subcontractors are owed, but a conservative estimate is £3m for the work they had already done. This does not include loss of earnings for work promised to them.
The managing director of one subcontractor, building services company Piggott & Whitmore, said he was angry that Curzon had not disclosed how bad its finances were prior to going into receivership. Alex Kirkwood said: "We have survived it, but no thanks to them."
n Surrey-based interiors business Cube has hired David Kingsbury former Curzon Interiors operations director. Kingsbury has been taken on as contracts director for the business, set up less than a year ago. It is expected to post a £4.5m turnover in its first financial year.
Cube is the sister company of fit-out design and build specialist Area Sq, which is expected to make £16m this year, up from £12m in 2004/05. The group should make a combined pre-tax profit of £550,000.