Administrator report details demise of PHD1
Warrington-based PHD1 Construction went bust earlier this year owing £11m to subcontractors and HM Revenue & Customs, according to a report from adminstrator Bridgestones.
Bridgestones Insolvency Practitioners was called in to PHD1 in April, a month after the contractor was sacked from three schemes in Manchester and Liverpool by Pinnacle Group.
In the last financial results posted for the year to January 2015, PHD1 had recorded a pre-tax profit of £384,000, on a turnover of £22m.
Pinnacle was PHD1’s principal client, and the contractor was active at Angelgate in Dantzic Street, Manchester, and in Liverpool was building projects at The Paramount in London Road, and The Quadrant in Shaw Street. It was also the contractor for North Point Global’s £90m residential project at Pall Mall, but was removed after its financial difficulties emerged.
According to the report posted on Companies House, PHD1 would gain a contract from Pinnacle and then act as a sub-contractor, employing the specialist traders required on a case by case basis.
Payment terms were five days, and from May 2015 PHD1 found it was receiving payments slightly outside of the agreed time frame. Bridgestones said that “these issues persisted and slowly escalated”, and by August the company found payment terms were not being adhered to, and by November some certificates were not being paid at all.
According to the report, “no formal reasons for why payments had not been made were provided”. However, Bridgestones acknowledges that six contracts were due to be completed by September 2015, and “clearly the company had not completed the contracts within the required time frame”.
In statement issued in March, Pinnacle said that it decided to end its relationship with PHD1 due to “significant performance issues and delays, eroding our confidence that the business is capable of delivering as promised on the developments.”
In a response to the administrator’s report, a Pinnacle Alliance spokesman said: “We categorically deny that payments were not made. We will be contacting PHD1 administrators in due course in order to address these claims. We reassure all investors and stakeholders of the financial security of Pinnacle Alliance. Unfortunately, significant performance issues and delays eroded our confidence in PHD1 even before the business was no longer solvent, which is why we stepped away from our involvement with them. All funds associated to our developments are ring-fenced and we remain fully committed to our investors and the completion of each of our projects.”
The report details that PHD1 owes around £11m; £7.8m to subcontractors, £3.6m to Blue Ray Enterprises, an unsecured creditor, and £75,000 to HM Revenue & Customs.