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Fresh hope for Watkins subbies
00:00 01 Sep 1994
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The receiver of VAT Watkins has given fresh hope to suppliers and
subcontractors hit by the building group's collapse back in June.
Coopers & Lybrand's interim report predicts unsecured creditors may yet win a significant pay-out - despite a combined deficit of œ10 million from VAT Watkins and its failed sister companies. Their hopes hang on efforts to secure repayment of a œ6 million loan made to the parent company - VAT Watkins Holdings - which has not been put into receivership.
Initially subcontractors and suppliers were angry that VAT Watkins Holdings appeared to be getting off scot-free. But it is now clear the receiver is allowing time for it to organise the sale of the Salperton village, valued at œ6-œ10 million. 'It's a jewel in the crown type of property asset that would not benefit from its owner going into receivership,' said a member of the Coopers & Lybrand team.
Barclays Bank - which refused requests for a further rescue loan on the advice of an independent report - is likely to retrieve the œ6 million it had already lent. The report says: 'It is likely the bank will be repaid in full once the assets of the group are realised and that, therefore, at some stage in the future, there may be funds in Holdings available for distribution to creditors.' The report blames Watkins' problems on:
l Inadequate financial controls and accounting procedures.
l Inadequate estimating and unrealistic profit assumptions.
l Expansion within the private sector to the detriment of the core public sector business.
l a œ2.5 million bad debt.
Kier and Botes Building will pay between œ154,000 and œ322,000 for the contracts they have acquired. The former took on the prestigious Mount Pleasant job for the Post Office, and the latter the majority of Watkins' smaller jobs.
Subcontractors and suppliers are estimated to be œ4 million out of pocket according to Watkins' ledgers. The final figure is likely to be higher still due to claims. Further claims are also expected against œ1.7 million of bonds and guarantees given to clients.
Coopers & Lybrand's interim report predicts unsecured creditors may yet win a significant pay-out - despite a combined deficit of œ10 million from VAT Watkins and its failed sister companies. Their hopes hang on efforts to secure repayment of a œ6 million loan made to the parent company - VAT Watkins Holdings - which has not been put into receivership.
Initially subcontractors and suppliers were angry that VAT Watkins Holdings appeared to be getting off scot-free. But it is now clear the receiver is allowing time for it to organise the sale of the Salperton village, valued at œ6-œ10 million. 'It's a jewel in the crown type of property asset that would not benefit from its owner going into receivership,' said a member of the Coopers & Lybrand team.
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Barclays Bank - which refused requests for a further rescue loan on the advice of an independent report - is likely to retrieve the œ6 million it had already lent. The report says: 'It is likely the bank will be repaid in full once the assets of the group are realised and that, therefore, at some stage in the future, there may be funds in Holdings available for distribution to creditors.' The report blames Watkins' problems on:
l Inadequate financial controls and accounting procedures.
l Inadequate estimating and unrealistic profit assumptions.
l Expansion within the private sector to the detriment of the core public sector business.
l a œ2.5 million bad debt.
Kier and Botes Building will pay between œ154,000 and œ322,000 for the contracts they have acquired. The former took on the prestigious Mount Pleasant job for the Post Office, and the latter the majority of Watkins' smaller jobs.
Subcontractors and suppliers are estimated to be œ4 million out of pocket according to Watkins' ledgers. The final figure is likely to be higher still due to claims. Further claims are also expected against œ1.7 million of bonds and guarantees given to clients.
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