Artisan thought to have lost £9m after trading while insolvent

The 200 creditors of Artisan Construction North (ACGN) who are owed a total of £9m have called on an involvency practitioner Gerald Krasner to investigate whether the company had been trading while insolvent.

ACGN was voluntarily wound up on November 17 and placed in the hands of accountancy firm Bennett Verby.

Crain’s Manchester Business reports that figures aired at a creditors’ meeting in Stockport showed ACGN to have run up trading losses of £9.7m between July 2007 and December 2008.

“ACG has almost no assets and those owed money are unlikely to see any return on their claims,” says Crain’s.

Eleven of the creditors triggered the call for Begbies Traynor partner Krasner to be appointed joint liquidator alongside Vincent Simmons of Bennett Verby.

Krasner is reported to have highlighted an entry in the accounts for the year to June 2007 showing that ACG was owed £10.2m by a “subsidiary undertaking”.

“Krasner said that sum was not accounted for in the liquidator’s report and had never been recovered,” says the coverage by Crain’s. “He said it would help creditors if it could be found.

“ACG managing director Paul Curran, who was appointed in June 2008, said the £10.2m was not a debt owed to ACG but was in fact related to inter-company invoicing."

After that exchange, Krasner said he could only conclude that the company was insolvent in June 2007, almost a year and half before it was placed into liquidation.

Under questioning from Krasner, the joint liquidator Simmons acknowledged that it was possible the company was insolvent in June 2007 and said this was something he was looking into.

Krasner also questioned the company structure in which all the development assets of ACGN were owned by other companies in Ainscow’s Artisan Property Group.

Crain’s said that Krasner then told the meeting: “What I fail to understand, all these creditors are owed money but the developments have all been done elsewhere in another group. So the benefits are in one group but all the losses are here today.”

After trading at that time as Artisan Construction Group, the firm changed its name on 2 July 2008 to ACG North.

ACGN’s auditor resigned on 7 July 2008.

Three directors quit during 2008:

• Howard Lipsey on 16 June 
• Helen Roocroft on 18 September 
• Carol Ainscow on 12 November

Two new directors have come on board in recent months:

• Moya Ball, who lives in Bolton, Lancashire, signed up on 29 May 
• Paul Curran, who is based in Manchester, followed two days later on 31 May

The initial liquidator’s report, based on submissions from the company, said that in January, 2007, ACGN’s cost base increased considerably when a new management team “embarked on employing a new structure of people to deliver projects”.

“Krasner said he would now begin looking more deeply into the company’s affairs,” reported Crain’s, adding that Krasner told the meeting: “There is a possibility of substantial recoveries on this job. The only way we are going to do this is by doing an investigation.”

Krasner came into the public profile as a result of acting as chairman of Leeds United football club. He took the lead in a consortium which tackled king-sized debts left by the previous owners before selling the outfit to Ken Bates.