Idea of credit insurers being open to negotiate is 'garbage'

The idea that credit insurance providers are willing to talk to contractors if their cover is arbitrarily pulled is "garbage", according to Neil Walters, commercial director of £50m-a-year turnover Linford Group.

Adrian Doble, head of restructuring services at Vantis, the accountancy group, issued a call to activate construction finance directors so that credit insurance cover can be restored.

“I have to take issue with that,” said Walters. “In the real world they don’t want to meet us. We’ve tried because we’d love to meet them."

Linford has been established for 170 years and as well as a main office in Birmingham, has additional bases in north Wales and Lichfield.

Walters says Linford is financial sound, and has bent over backwards to provide more up-to-date figures than ever before.

With a financial year-end in September, the latest accounts have been produced five months faster than ever before. “But that’s made no difference whatsoever,” he says.

The provider of its bonds, Euler Hermes, is still willing to provide bonds - yet on the other hand credit insurance cover (also provided Euler Hermes) was pulled six months ago.

The salt is being rubbed in the wound by the fact that rates required for bonds are so good.

“We are offered superb bond facilities by Euler Hermes,” says Walters. “The rates are the equivalent of those asked of large national groups.”

“We have tried to meet underwriters Atradius and Euler to see what the problem is and they will not meet or talk. We hear this from a number of other affected main contractors.”

The knock-on effect of subcontractors and suppliers no longer being able to obtain credit insurance cover when working for Linford is being felt in two ways. “We are paying pro-forma for more goods and discounts are being eroded,” says Walters.