Pierse UK operations went down with 72 CCJs against them

The failed UK operations of Irish contractor Pierse racked up 72 county court judgements (CCJs) against them for failing to pay suppliers and subcontractors.

And there are fears that subcontractors who worked for Pierse Contracting and Pierse Contracting Southern, which both went into liquidation earlier this month, could meet a similar demise after being left out of pocket.

Specialist Engineering Contractors Group chief executive Rudi Klein indicated that a year ago, the net worth of the two companies was between -£4m and -£5m. Pierse Contracting had 29 unsatisfied CCJs against it over the past 12 months, while Pierse Contracting Southern had amassed 43.

Klein has sent a letter to former construction minister Ian Pearson, who was replaced by Ian Lucas on 11 June, in which he warned of the "many small firms in the construction industry which are suffering from bad debts following insolvencies up the supply chain". He is now seeking a meeting with the new minister.

"Why are public sector bodies engaging insolvent main contractors and, therefore, putting them in a position to inflict substantial financial damage on the rest of the industry?" Klein continued in his letter.

And he called on the minister to support three amendments, introduced by Lord Borrie in the House of Lords, to the Local Democracy, Economic Development and Construction Bill (see box).

Speaking to CJ, Klein said: "It is the first time I have ever come across anything quite like this. When I got the paperwork I was absolutely astounded."

He said that he knew of at least one scheme - the £10.7m construction of a police training centre in Winsford, Cheshire - where Pierse's demise had a serious impact on other firms on the project. However he declined to name the companies involved.

Lord Borrie's Construction Bill amendments:

1. Total abolition of paid when paid arrangements - getting rid of the exemption in section 113 of the Construction Act where a main contractor does not have to pay a subbie in the event of client insolvency.
2. Deletion of a government amendment that would encourage payers to delay payment beyond the final date for payment to establish whether this will put the payee into insolvency.
3. A statutory obligation on the payer to give payees security for payment such as a payment bod or bank guarantee on request.