Thursday, January 29, 2009

Pettifer Construction: not a penny for unsecured creditors

The unsecured creditors owed money by Pettifer Construction after it went into administration eight weeks ago will receive nothing at all as there are no funds to pay them.

The Royal Bank of Scotland triggered the collapse when it cut the overdraft facility to the Warwickshire-based construction division of the Pettifer Group on 24 November 2008.

That caused an insurmountable cash-flow headache and Pettifer was unable to pay the November payroll and that situation effectively caused the company to cease trading.

These details are revealed in a report by Richard Philpott, joint administrator for KPMG, which has gone to all Pettifer’s creditors.

Philpott also reports that when KPMG was appointed Pettifer had five live projects and employed 111 staff.


Pettifer Construction: not a penny for unsecured creditors


Summarising the events leading to his appointment, Philpott stated that the company had made recent losses, driven by problematic contracts before being “further impacted by the reduction of the overdraft facility”.

As cash-flow pressures increased, there was no working capital left and the directors had no alternative but to put the business into administration.

Philpott explained that the level of the indebtedness was so high and that – along with continuing trading losses – meant that a sale of the company as a going concern was not possible.

KPMG appointed Naismiths to review the status of the five ongoing construction contracts in order to determine whether or not there was any value in the novation of them.

Naismiths went into action, contacting several potentially interested parties.

“After discussions with company management and a number of interested party meeting on-site, Naismiths concluded that there was no value in the majority of the contracts – although one of the five has been sold,” said Philpott.

An on-going legal claim relating to a pre-appointment contract is been investigated by KPMG, its lawyers and Naismiths. The outcome is uncertain.

Where projects have been completed but remain in the retentions phase, Naismiths is to review the ongoing payment situation. It will oversee the collection process.

The timescales involved mean that this process is expected to “run for several years”.

Thus far, KPMG has run up costs of ВЈ98,000.

Royal Bank of Scotland had charges over the company assets as its security against its loan and overdraft facility.

“There are a number of cross-guarantees between the group companies” said Philpott.

RBS is owed almost £14m and the verdict at this stage is that it will “suffer a shortfall from realisations available to it”.

John Groves of Alcester and Brian Pettifer of Broadway, Worcestershire, jointly hold 58 other directorships and the names on the lengthy lists of each of them include:

Pettifer Construction (now in administration) Pettifer Investments Pettifer Group Pettifer Group Holdings pcm Knowledge Online

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