A dispute over an outstanding £7 million debt for work completed on Exeter’s flagship Princesshay project has caused contractor Michael Thorne Construction to apply for a Company Voluntary Agreement (CVA).
The company undertook contracts at the city centre shopping complex involving concrete floors, block work and hard landscaping but the original contract value ballooned from £4.5 million to £13 million after delays and additional works were carried out.
The outstanding £7 million at the centre of the dispute has forced its directors to apply for a CVA where some 300 creditors will initially receive 29p for each pound owed with an undertaking to pay back outstanding debts when the Princesshay related debt and another significant dispute involving £1.35 million, are settled.
A further 200 creditors owed less than £1,000 each will be paid in full as soon as the CVA package has been ratified.
A significant investment package from private investors and current directors has been agreed providing financial stability for the company going forward.
MTC’s managing director, Rob Holland said: “It has been a very tough time for everyone but with a good order book, a loyal staff and incredibly supportive suppliers, we are determined to trade through this situation and meet all our responsibilities and obligations in full.
“If Michael Thorne fails to recoup what we believe we are owed, it will be ironic that a project that has won widespread acclaim and is seen as a symbol of the Exeter’s success and prosperity, may well end up costing a significant number of local and regional jobs as literally hundreds of businesses will be under threat."
A full meeting of all MTC’s creditors is being convened in early March.