Crossfield Construction to be wound up after two years of ‘hell’
UPDATE 12 July 2022: Crossfield Living has also gone into administration
Founder David Cain told Place North West he has secured investment that will allow him to pay creditors in full before liquidating the firm’s construction arm and starting afresh.
Cain hopes a £3m cash injection from London funder Daniel Moretti will allow him to pay off Crossfield Construction’s supply chain in full after a period he describes as “absolute hell”.
Like many contractors, Crossfield Construction was hit hard by the pandemic, but instead of winding the business up and leaving creditors out of pocket, Cain said that he kept the company going so that he could find a way to pay his suppliers.
“18 months ago I could have taken the easy option and wrapped it all up,” Cain said.
“I didn’t want to do that, it’s not right. [The supply chain] has done the work and they are owed the money. All I am interested in now is getting them paid.”
Aside from moral drivers, Cain admits that there were practical reasons behind the decision not to call time earlier.
“I live in Liverpool and I want to be able to go out with my family for my tea,” he said. “I don’t want the reputation of having walked away and left people out of pocket. I don’t want that to be my legacy.”
Moretti’s investment will see him take a 35% stake in Crossfield Living, the development division that is unaffected by the construction division’s struggles.
Crossfield Living, another group company, is delivering homes for First Choice in Oldham. Credit: via FCHO
Crossfield Construction’s live contracts and staff will be transferred over to Crossfield Living with no job losses, Cain said.
Law firm Begbies Traynor has been drafted in to liquidate the construction division, which Cain established in 2010.
Crossfield Construction joins a growing list of medium-sized contractors that have gone out of business in recent months and years.
Most, if not all, have cited the tiny margins contractors work to as the main reason for their struggles.
Cain estimates the average profit margin for a contractor is 2%, which means even the smallest hiccup on site can drastically impact a company’s bottom line.
Throw a pandemic into the mix and it is unsurprising that so many firms have gone under in the last two years.
Artez, Beaumont Morgan, Create Construction, CPUK, Cruden Construction, Goodwin’s Construction Services Group, and Harry Fairclough, have all collapsed since 2020, leaving creditors in the lurch.
Slim margins provide unstable foundations for contractors and the strong winds of the pandemic were just one factor is Crossfield’s demise. The ongoing difficulties of Liverpool City Council also had an impact, Cain said.
Following the arrests of several high profile council employees and the damning Max Caller report, development in Liverpool has slowed, according to Cain. Council staff now seem scared to make decisions on development for fear of ramifications, Cain added.
“As much as it frustrates me, to be fair to them they are just terrified,” he said.
When approached by Place North West, Liverpool City Council said that it “did not recognise the scenario” illustrated by Cain with regard to slow decision-making.
The authority added that it was working with all applicants to make sure schemes comply with the city council’s newly adopted local plan.
Seddon will now be progressing the Longshaw Drive scheme. Credit: via planning documents
A hostile market, a pandemic and the situation surrounding Liverpool City Council mean that rumours of Crossfield Construction’s struggles have circulated for several months.
The company’s financial results for the year ended 31 January 2021 reported: “certain material uncertainties which may cause doubt on the company’s ability to continue as a going concern”.
Last November, Sefton Council cancelled the company’s £3.1m contract to redevelop the Crosby Lakeside Adventure Centre, citing “unacceptable delays”.
Cain admits the cancellation of the contract had come as a surprise as he had been trying to work with the council on a way forward.
In January, Place North West reported Salford City Council had selected Crossfield as the preferred contractor for a £36m housing job in Little Hulton.
However, uncertainty about the company’s future prompted the council to reconsider. Seddon has now been appointed on that job.
Prior to the difficulties of the last two years, Cain had ambitions of growing his firm into a tier one contractor.
However, after a period that has impacted on his physical and mental health, he now wishes he had taken things more slowly.
“I think I should have been more cautious. I could have managed the growth and been a little bit less optimistic,” he said.
By paying off creditors and winding up the construction side of the company, Cain hopes to be able to start afresh with the goodwill of his supply chain intact.
While Cain maintains he wants to remain active on Liverpool’s development scene, the scale of his future ambition will be tempered by the experience of the last two years.
“I couldn’t go through that again,” he said. “I don’t know if you can succeed now. I think I was a bit naive in climbing that ladder.”
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By Julia Hatmaker