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Galliford Try denies £3m claim by collapsed Power One

Administrators for Paisley-based subcontractor Power One have claimed the firm was owed in excess of £3m by Galliford Try due to a contract dispute.

A statement of affairs for Power One Electrical Contractors Limited by administrators French Duncan Restructuring found that the contractor suffered from an acute cashflow problem at the point of collapse due to debtors owing the firm £3.58m.

Administrators reported that 96 per cent of money owed to the firm was related to payments from a disputed contract with Galliford Try, a figure disputed by the contractor, which also claims it assisted with Power One’s cashflow problems by paying them ahead of time.

The administrator’s report states: “Based on the discussions with the director and our investigations to date, the insolvency of the company was largely due to the dispute with Galliford, who, according to the company’s books and records, owe the company in excess of £3m.

“The amount of debt owed is disputed and, given the significant sums involved, the non-payment led to a major cashflow issue.

“As a result, the company could no longer continue to meet its liabilities as they fell due.”

The debt accusation has been denied by Galliford Try, which said it “did not recognise” the figures within the administration report.

A Galliford Try spokesman said the company “does not recognise” the events as set out according to the administrator’s report.

He said: “Our policy is always to deal fairly and promptly with subcontractors, suppliers and clients and we were sad to see Power One take that step.

“Payments were made to Power One through the course of the project in line with the terms of the contract, including payments made ahead of time to assist them with their ongoing cashflow issues.”

The spokesman added that additional sums being claimed by Power One concerned ”disputes over and above their contractual entitlements”.

According to the administrator’s report, Galliford Try employed five different commercial quantity surveyors over the contract period, which “made it difficult to get commercial agreement each month on the measured and compensation works”.

The report notes that Power One appointed Bibby Factors Limited and The Vinden Partnership to take over the commercial running and monthly applications on behalf of the company, with both firms launching adjudication action against Galliford.

In August the adjudicator Terence Vaughan found in favour of Power One.

However, the report states that although the adjudication was successful, “at this point Galliford altogether stopped releasing funds”.

It continues: “As Galliford made up the vast majority of the company’s debtor ledger, this had a significant detrimental impact on the company’s cashflow.”

Construction News reported earlier in September that Power One had been embroiled in a dispute with Galliford Try Infrastructure over a £9m subcontract to replace nearly 17,000 lamp posts across Northumberland. 

At the time, Power One chairman Mark Ward warned that the dispute had put his company “under extreme financial pressure” with jobs at risk.

The statement of affairs for the firm shows that the debt has been given an 80 per cent discount by the administrators in an attempt to recover some of the losses.

However, the report said: “The recovery of this debt is uncertain and it is not unusual in an insolvency event to apply a discount to the recoverability of the debtor ledger.

“In this instance, an 80 per cent discount has been applied given the uncertainty surrounding the Galliford Try debt.”

At the time Power One fell into administration, the firm had employed 37 people, all of whom have been made redundant.

The statement of affairs published by the administrators showed that Power One owed £1,114,855 to unsecured creditors including HM Revenue and Customs and the Department of Trade and Industry. 

Readers' comments (7)

  • Typical Subbie bashing from a main contractor. You can see all the hallmarks - 5 different QSs employed, no agreement to variations, and a refusal to pay up despite losing the Adjudication.

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  • Another Galliford Try special rip the subbie off leaving them unable to fulfil their obligations to staff, creditors and revenue to make their profit.

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  • Typical Galliford Try why does anyone expect anything less, cannot understand why anyone works for them, those of us old enough remember Birse who did eventually collapse because no one would work for them here is hoping!!

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  • Subbie Bashing still alive and well - Sickening, disgraceful, immoral - how much longer can these companies get away with it? Something must be done to protect decent hardworking SME's from these large companies. The news is full of stories about the huge losses they have been making, who on earth prices up their contracts? Why are they surprised at the lack of skilled labour available - serves them right, no one in their right mind would risk working for them.

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  • So the Adjudicator ordered Galliford Try to to pay the monies, they deliberately did not pay as ordered, Power One are then forced into insolvency by this non-payment and the administrators have to give the guilty party an 80% discount! Have I misunderstood as this surely cannot be right? In that case, a smaller company can win an adjudication, the other Party refuses to pay knowing that it will put the other out of business. Once this happens they can get away with non-payment of an Adjudicator's Decision? What the hell is the point of Adjudication then. From what I understand, the money has to be paid to the successful party and if you feel the Decision is wrong you have to attempt to recover through litigation. What a joke! Surely the Courts should make them pay until and unless this is done? A disgrace!

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  • Typical Galliford Try possibly the No1 subbie badger of the tier 1 contractors , I know so many contractors been ripped off by them , they are a absolute disgrace , there typical tactic is to starve the subbie and hope they go out of the game , I think they struggle to keep their supply chain , only a fool would go in to contract with them

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  • Why would anyone want to invest in this primitive and very unbalanced industry. It’s a shame that incompetents like contract QS’s have the power to obliterate strong and good companies by power of the pen and either ignorance or lack of knowledge. The legal and judicial systems are fraught and not fit for purpose. It will take a far bigger sea change to make this industry better - in the mean time it’s just dog eat dog. Poor form Galliford - make no wonder you struggle to find subbies !!

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