London contractor Buildstone has gone bust, leaving debts of more than £10 million.
The company ceased trading at the end of last week and a creditors’ meeting has been scheduled for 10 March. It is the second of six companies that were initially shortlisted for the concrete package on the Pinnacle skyscraper project to go out of business.
Buildstone had been tipped to win the prestigious contract before being eliminated from the running shortly before Christmas.
The Ealing-based contractor reported a turnover of £30.4m for the year to 31 March 2009, with a pre-tax profit of just £16,000.
According to the accounts, the company had a net debt of more than £10.5m.
It had more than £2.4m of payments due to creditors this year - including £875,000 worth of debts owed to trade creditors.
It also had £4m of bank loans due within two years, and a further £7m shareholder loan, due to be redeemed in 2016.
London insolvency practitioner Panos Eliades Franklin & Co has been appointed to handle the administration, but was unable to comment before CN went to press.
A source at a rival company said: “The thing is, they didn’t seem to be struggling. It came as a big surprise for us.”
But another contractor disagreed with that assessment.
“They could be wickedly cheap and take a job when they really shouldn’t have,” he said. “So it was only a matter of time before this day came.”
In Buildstone’s 07/08 reporting period, which ran from 23 January 2007 to 31 March 2008, the company recorded a much lower turnover of £18.7m, but with a profit of £420,000.
The company has recently worked on several major construction projects including Brookfield’s £120m, 43-storey
Castle House apartment block at Elephant & Castle, south London, and its £335m redevelopment of the Edith Cavell hospital in Peterborough.
It was then one of four companies to reach the second stage shortlist for Brookfield’s Pinnacle concrete core deal last year.
Sources had tipped Buildstone to secure the job, but the firm was told just before Christmas it was no longer in the running when the shortlist was cut to two.
Buildstone’s collapse follows the administrations of a string of other medium-sized contractors, including Lancsville, which also made the first round shortlist for the Pinnacle concrete job in London.
Administrators Vantis are currently finalising a report on Lancsville’s debt and assets, which will be circulated to creditors this month.
Emma Bridges, a director at credit agency Top Service, said: “It’s been a bad start to the year for construction companies, with insolvencies coming in thick and fast.”