Firm sunk by credit crunch
The firm has been forced into a ‘company voluntary arrangement’ – an agreement that allows a firm to repay debts from future earnings – in an attempt to keep the business afloat after one of its biggest clients, Windsor Development Liverpool (WDL), went under.
It is understood Downs Variava, which has a staff of 26, was owed more than £500,000 in fees by WDL.
Practice director John Hickey said: ‘I suggest every architect in Britain should be wary of this happening to them. This is the tip of the iceberg when it comes to the recession and the sub-prime trading problems. I think we were also affected by other projects slowing down.’
On Monday (21 January) stock markets in London and Europe suffered their biggest one-day falls since September 11 2001, and are continuing to feel the squeeze.
Make boss Ken Shuttleworth said his 130-strong practice had two projects put on hold at the end of last year and another scheme – which he declined to identify – mothballed two weeks ago. He added that the firm has also decided to put a hold on recruitment.
Shuttleworth said: ‘If you imagine a roller coaster, the construction and architectural industries are its cars. Certain sectors of the market have reached the peak and have now started their descent; we are in the rear carriages and still enjoying the “up” part.’
And former RIBA president Jack Pringle said some of his own schemes were on hold, and that some projects are being questioned and reappraised.
‘People are flat-out with the existing work but are still talking about a slow-down and delays to projects,’ he said.
‘It’s partially because of a loss of confidence but mainly because of the international credit crunch pushing up developer finance. Developers are starting to redo their sums, and the situation is looking pretty bleak for new-build stuff.’
Foreign Office Architects director Alejandro Zaera Polo said: ‘Everything is slowing down, that is palpable. We have a couple of projects in Spain that are slowing, one where the project has been sold to another client. It won’t stop the project but it’s another sign.
‘Schemes we thought would go quite quickly have been put on the back-burner.’