Cross-guarantees could put rest of Pettifer at risk

After the collapse into administration of three major parts of the Pettifer construction empire, based in Warwickshire, there are doubts over the survival of the rest – with everything hanging on the level of cross-guarantees these businesses are carrying.

Cross-guarantees mean that should one party to the agreement falter then the second party would be forced to make up any financial shortfall.

Details of the extent of cross-guarantees between various parts of the business are not known.

“Potential cross-indemnity could bring the rest of them down,” said a KPMG administrator. “The director’s report will reveal details of the cross-guarantees.”

So far three chunks of the Pettifer empire have collapsed into administration:

• Pettifer Construction – on 27 November
• Pettifer Estates – on 3 December
• Pettifer Group – on 8 December

The consultancy operation that trades as PCM is part of the Pettifer Group. It must be sold by the end of this week.

Other parts of the group still in operation include:

• Pettifer Investments
• Pettifer Leisure
• Pettifer Developments 2002
• Pettifer Group Holdings
• Pettifer Estates (Holyhead)
• Pettifer Estates (Kilmarnock)

Pettifer Construction’s employees, furious at the way they were treated by their former employer, are reported to have carried off computers and printers in lieu of unpaid wages and outstanding expenses.

A plan to rebrand Pettifer’s construction division as Fortis GB had been in the pipeline for several months, but that plan narrowly failed to reach fruition.

The reason given for the name change is that it would have allowed the business to continue but with two new directors sitting on board. Alongside the existing pairing of Brian Pettifer (chief executive) and Delwyn Groves (finance director) would have been

• Chris Pape – managing director
• Mark Savage – contracts manager

That plan wobbled badly when just one day before the proposed re-branding was to have been announced a Danish foreign insurance company called Fortis crashed. It had no link whatsoever to Fortis GB – it was just an unfortunate coincidence that their names had been almost identical.

If that hadn’t happened, the new name Fortis GB would have been presented to the world on 1 October and the title of Pettifer Construction would have been painted over.

Pettifer Construction fell because it had no cash was not trading profitably, said the administrator.

Asked why it went under, he said: “It was a cash flow issue. Things had got worse over time.”

In 2007 it ran up a pre-tax loss of £7m.

There is not a scenario in which Fortis GB could yet resurface with the £58m of future work that Pettifer had already bagged for 2009, said the administrator.