London fit-out specialist Beck Interiors went under after a client withheld £16m during a dispute, administrators have revealed.
A new report from administrators at Begbies Traynor also revealed that it was nearly bought by a subsidiary of Spanish engineering giant Acciona before its collapse in July.
The £140m-turnover contractor, which became an employee-ownership trust (EOT) in 2021, worked on luxury hospitality, leisure, residential and museum projects.
Administrators said it had net assets on its balance sheet of more than £28.5m but faced “liquidity challenges” due to the dispute with the client, which is not named in the report.
This led to “a figure estimated by management to be in the region of £16m being withheld”, they added.
No further information about the dispute is provided in the document. The administrators also cited unspecified “supply chain failures” and “increased costs on current contracts” for Beck’s problems.
As well as the disputed client money, Beck was owed £9.4m in retentions when it went under.
The company was hit by a winding-up petition in June, led by Mitsubishi Electric, which saw more than 20 other companies join.
Begbies Traynor said it had received more than £69m in claims from unsecured creditors since Beck’s collapse in July.
Those companies are not expected to receive any of the money they are owed.
Begbies Traynor was hired before the administration to try to sell Beck Interiors. It received three offers in early July, including a £2m bid for parts of the firm from Acciona Cultural Engineering, a museum-focused subsidiary of the Acciona Group.
Broad heads of terms were agreed and paperwork was drawn up, but Acciona was unable to complete a deal within the swift timeframe Beck required, the report said.
Since July, two of Beck’s biggest contracts have since been sold to two related companies.
A pre-pack sale of its contract at the Whiteley Hotel in London’s West End was sold soon after the administration. The facility is to become the first UK location of Thai-owned multinational resort Six Senses. Administrators announced the move in August, but did not detail the transaction at the time.
Hub Consulting, controlled by Beck MBI Ltd, the entity that also had significant control of Beck Interiors and has been run by several current or former directors, bought the contract and assets on the job for £200,000, saving 21 jobs.
It also paid £550,000 to secured creditor Barclays to remove the bank’s security over the job.
Another 21 jobs were saved after Beck’s contract to refurbish London’s Dorchester Hotel was sold for £100,000 to Elemental Newco 2 Ltd, a new company set up by directors of Beck Interiors.
A total of 148 people were nevertheless made redundant as a result of the administration. The former employees are set to receive arrears in wages and holiday pay.
Beck Interiors owed secured creditor Barclays £3.4m and secondary preferential creditor HMRC £6.9m, the report said. It is not yet known how much each is likely to receive following the administration.
Several other contractors that have also adopted the EOT model have gone into administration in the past 12 months, including Michael J Lonsdale, Buckingham Group and Readie Construction.
Earlier this year, Construction News examined whether the costs of becoming an EOT had contributed to their financial troubles.
