A Staffordshire building company with a contract for the 2012 Olympic Village collapsed owing trade creditors more than £4.8 million, administrators have revealed.
The adminstrators’ report about Chasetown-based cladding firm Parry Bowen, which collapsed in October, lists almost 300 unsecured creditors.
The company, which was supplying the Athletes’ Village for the 2012 London Games, axed the vast majority of its 150 members of staff when it ceased trading last year after a downturn in the market dented its cashflow.
The firm, which had posted a pre-tax profit of £691,000 in the year to June 30, 2010, called in administrators from PwC days later.
The report, compiled by administrators Mark Hopkins, Edward Williams and David Hammond from PwC, states: “In the year to June 2011 the company began to experience the downturn in the market, particularly in relation to profit levels resulting in a loss for the year.
“The key issue, however, was the extent to which the company experienced a cash outflow in the period mainly as a result in late or withheld payments from main contractors.
“Following a downturn in the market and difficulties arising on certain key contracts which had given rise to the company running out of cash, on October 24, 2011, the directors announced the closure of the company and an intention to appoint administrators.”
Parry Bowen had secured contracts for the construction and design process of the curtain walling and glazing at the Athletes’ Village in Stratford for the games.
The company turned over £23 million in the year of June 30, 2010
The firm blamed the “dreadful state” of the construction industry for the collapse and administrators said the company had ceased trading prior to their appointment, but it was found that one contract was capable of being completed, with three contracts capable of part-completion.
So it was decided that trading would be resumed for a limited period, and 15 employees were taken back on.
The report added: “The overall effect of the agreement is to maximise the value of the completed units, stock and work in progress that would otherwise have had minimal value as far as the creditors of the company are concerned.”
Experts have found that the firm’s contract balances have a book value of more than £6.9 million, but it is thought they will realise between £352,000 and £992,000.
The company was among more than 300 from the West Midlands to have won contracts to supply the 2012 Games.
The Birmingham Post revealed in July that firms from the region have amassed £515 million worth of deals to supply to the games – more than any other region outside the South-east.
The contracts range from Wolverhampton-based Carillion, which landed a nine-figure deal to build the media centre, to Birmingham firm Acme Whistles, which will supply whistles for Olympic officials.
* A creditors’ meeting will be held at Fairlawns at Aldridge Hotel, in Walsall, at 10am on January 4.