RECEIVERS appointed to handle the break-up of Bow Scaffolding have defended trying to sell a series of contracts to a new company set up by current Bow boss Michael Bowkett.
PricewaterhouseCoopers was called in by the Bank of Scotland on June 30 after the Essex-based contractor ran up debts of £20 million.
The receiver is dealing with a company called Scaffserve, to which it is hoping to novate a series of lucrative contracts including work at Birmingham Town Hall and a social housing scheme in Hackney, east London.
Scaffserve was set up on May 6, eight weeks before PwC was called in. But Construction News can reveal that on the same day the receivers were dialled up, Mr Bowkett was made director of Scaffserve, which has been formed to take work on from Bow's southern arm.
Joint administrative receiver Rob Birchall said:
'When a business is sold back to the management it looks a bit funny. But as the receiver I have a duty to get the money back and, if that's the only way, that's what I'll do.
'In my experience, if a sale is not done quickly, the whole thing collapses and there is no money for anybody at all.Obviously creditors won't get all their money back but this way at least they will get back some pence in the pound.'
Bow, which also has a turnover of around £20 million, is believed to owe the Bank of Scotland at least £11 million after Mr Bowkett bought back Bow from Mitie two years ago for nearly £5 million in cash plus £6 million in existing debts.The Inland Revenue and VAT-man are believed to be owed £4.5 million, leaving trade creditors about £5 million out of pocket.
Bow employs around 500 people across four regions, which, besides the southern area, the largest in the group, cover Scotland, the north and the northeast. PwC is hoping to transfer contracts covered by these three regions to rivals or sell the businesses off.
Mr Birchall said he was hoping to make an announcement this week about the possible sale of one of the divisions, believed to be its Scottish operation, which has offices in Glasgow and Edinburgh.