Report by administrator Rothman Pantall says £8.89m is outstanding to subcontractors and Inland Revenue
Fit-out contractor Spectrum Projects, which went into administration in August, is facing debts of almost £9m, according to a report to creditors.
The report by administrator Rothman Pantall estimates that outstanding claims from unsecured creditors amount to £8.89m, including more than £7.73m owed to subcontractors. The rest, £707,000, is owed to the Inland Revenue.
The report adds that a large number of clients could lodge claims against Spectrum over contracts that had already been determined.
The report’s author writes: “I have been put on notice that numerous clients will be lodging claims against the company in respect of contracts that have been determined. Accordingly I anticipate that the quantum of non-preferential unsecured creditors’ claims is likely to increase.”
The report also gives an insight into why the firm folded despite being one of the major players in the interior fit-out market. Spectrum increased its turnover from £6.5m to £61m between 1996 and 2001, but there were no cutbacks in staff and overheads after the market fell in 2001.
According to Rothman Pantall, the firm was unable to secure any fresh work until March 2002, which resulted in a loss that year of £401,588. This was then aggravated by a cash deficit of £2m, which was blamed on clients that withheld payments on several projects.
After its cash flow and liquidity began to be affected, its credit rating fell and it was unable to secure three more major projects worth £13m.
The report says that after that, the contractor was hit by two further setbacks to major schemes. One due to start in March did not do so until late July while another still has not begun. The two projects were worth more than £15m.
The failure of Spectrum, the most significant loss in the fit-out sector since Churchfield went bust in 2001, was brought on by the collapse of the London fit-out market in 2002/03, when the number of private commercial orders dropped by one-third.
Rothman Pantall said 64 staff had been made redundant.
Spectrum was founded in 1996 by Brian Tripp, who had worked with US contractor Nico, one of the first firms to introduce the fast-track fit-out market to the US. Tripp teamed up with fellow Nico employee Matt Bray for the venture. It was initially backed by the contractor Bellwater, which took a 55% stake.