Lakesmere founder Mark Davey has revealed to Construction News that he personally lost £15m when the company collapsed last October and was its largest unsecured creditor.
The building envelope specialist went into administration on 27 October owing hundreds of unsecured creditors £26m, with “no prospect” of any of this being recovered, according to administrator Deloitte.
A number of subcontractors expressed anger when Mr Davey’s new company Kaicer bought a significant amount of assets from Lakesmere, which he sold in 2015, and started trading from its offices just weeks after it collapsed.
Mr Davey said: “What I will say to that is I’m the largest unsecured creditor [in Lakesmere].
“I personally lost over £15m.”
He continued: “The events leading up to [Lakesmere’s administration] were gut-wrenching for me. It was very emotionally draining.
“I lost the business I built up and I personally lost a lot of money.”
Around two weeks later Kaicer took on 120 Lakesmere staff and eight of its contracts – including on Crossrail and Hinkley Point C.
Kaicer also retained Lakesmere’s branding.
Mr Davey said: “I am emotionally attached to the old Lakesmere and the 25 years of the business – I didn’t want that to disappear.”
He added: “There’s something in my blood, I couldn’t just walk away from that situation.
“I wanted to ensure the continuity of the business, which is what I tried to do.”
Kaicer has worked with its key suppliers to address their concerns, Mr Davey told CN, adding that the firm had enjoyed strong support.
“I’m sympathetic and empathetic to the supply chain,” he said. “We’ve tried to help the supply chain wherever possible.”
He added: “We’ve had a vast majority of our supply chain – not 100 per cent, but a vast majority of them – support us moving forward.”
Lakesmere’s management was criticised for an alleged lack of communication with the supply chain in the lead-up to its administration, with some saying the directors “strung them along for months”.
Mr Davey said he had little involvement with that side of the business at the time.
“I think the board were dealing with the situation at that point in time. My focus was on the turnaround plan,” he said.
“I didn’t have a huge amount [of contact with the supply chain] at that time.”
He added: “As I said at the time, I am personally gutted and sorry that the situation has happened.
“But I can’t comment on what the directors were saying to people at that point in time.”
Asked whether he was sorry for the suppliers and subcontractors that had lost money and been forced to lay workers off, he said: “I’m sorry about the whole situation.”
Lakesmere’s biggest lender, HSBC, asked Mr Davey to put together a plan to save the business in October last year.
He said: “The bank asked me to do a turnaround plan and I prepared to inject more funds into the business on the basis that I had control again.
“But the turnaround plan could not be agreed [with the stakeholders].”
Mr Davey had given up ownership of the business in December 2015 as part of a management buyout. having run Lakesmere for 22 years.
This MBO was led by Ted McMullen, who had owned McMullen Facades until Lakesmere acquired it out of administration in 2012.