A mystery architectural practice is in talks with Austin-Smith:Lord to buy the company and its key project in Abu Dhabi – the source of its financial problems.
A number of names have been linked to the insolvency-threatened practice which was forced to begin company voluntary arrangement proceedings earlier this month due to late payment of more than £11.3 million from its main debtor, the Abu Dhabi Authority for Culture & Heritage (ADACH).
Last week (see below) the 61-year-old practice received an initial payment of £2.4 million from the ADACH and has since adjourned its creditors meeting until Friday (2 December).
Partner, Neil Chapman, stated: ‘We’re giving the received proposal serious consideration and assessing the merits of the offer for the practice, the project and our creditors.
‘While the fees received to date are not sufficient to avoid entering into a voluntary arrangement, it is incumbent on us to ensure we explore all possible avenues to recover and improve the situation to maximum effect and for all concerned.’
Previous story (AJ 23.11.11)
Austin-Smith:Lord recoups £2.4 million - but CVA unaffected
Insolvency-threatened Austin-Smith:Lord (ASL) has received a payment of £2.4 million form its main debtor, the Abu Dhabi Authority for Culture & Heritage (ADACH)
The sum, which relates to unpaid fees on a long-running scheme in the Emirate dating back to around May, makes up nearly a quarter of the 61-year-old practice’s total debt of £11.3 million.
However the payment will not affect ASL’s company voluntary arrangement (CVA), which the practice filed for last week and which s expected to be agreed to by its creditors next Monday (28 November).
Received on Thursday and Friday last week, the part-payment will be reserved for ‘the purposes of the arrangement’.
According to the practice, ADACH has confirmed its intention to make further payments in December ‘against agreed invoices raised’.
But the authority has told ASL there are a number of invoices ‘requiring additional input’ from the practice before further payment will be made and that these sums will take longer to recover.
ASL partner Neil Chapman said: ‘While this is welcome news, the sums received to date are unlikely to have any impact on the voluntary arrangement programme.
‘However, it does offer obvious encouragement for both ASL and its creditors going forward and on the understanding that avoiding a voluntary arrangement is in the best interest of all, including the client, the practice will be keen to see further movement of funds as soon as possible.’
The CVA document seen by the AJ last week revealed how the practice had been forced to ‘dramatically and suddenly’ change its business model due to the delay in payment of the Abu Dhabi fees, resulting in a reduction of workforce from a one-time peak of 180 staff to just 65.