He said that in today’s cash-strapped environment, subcontractors have become “over-aggressive”, putting winding-up orders on firms that owe them money rather than following the adjudication route.
One of the two is reported to have finished work for Verry in December and payment of more than ВЈ120,000 had been due at the end of January.
Gibson said: “As it stands, a couple of issues have been dealt with.”
He said subcontractors who have had adjudication written into the terms of their contracts are no longer willing to follow through that method of resolving issues. “Most seem to want to by-pass that,” he said.
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Verry announced a profit margin of just 0.2% in its last annual results. “As a company we have just started on £150m-worth of work on site, most of this being BSF (Building Schools for the Future) work," said Gibson. "It is profitable work.”
He blames the bad climate for subcontractors becoming over-aggressive and being left “scrapping around for cash”.
“We spent 18 months bringing in BSF work,” said Gibson. “It cost us money but we have taken the brave position of chasing profitable work.”
There have subsequently been delays in getting onto site, he added.
Asked about issues with credit issuer Euler Hermes, Gibson said Euler had ceased to provide guarantee bonds to contractors throughout the UK. “Its bond division has been totally wound down and we’ve got bonds from other companies,” he said. “Euler are cagy about the building industry.”
Last December, Contract Journal was told that Verry had ceased to provide management information to the one insurer still willing to provide its suppliers with credit insurance cover, the result being that no cover was available to subcontractors.
Craig Jones, chief executive, had disputed that scenario. “I know of no problems whatsoever,” Jones said at the time. “We get our bonds from Euler Hermes as well.”
Last week, when asked if there had been a cash outflow as a result of the credit insurance cover situation, Jones said: “Speak to John. This is not territory for a chief executive.”
When Gibson was asked if cash-flow had been affected by credit issues facing Verry, Gibson said: “No”.
However Gibson conceded he was short of details on Verry’s credit insurance position. “I haven’t been told we haven’t got it,” he said.
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