Collapse of King's Lynn building firm Chalcroft leaves creditors owed £12m
PUBLISHED: 16:42 22 February 2019 | UPDATED: 17:09 22 February 2019
Firms could be left millions of pounds out of pocket by the collapse of a Norfolk construction firm.
King’s Lynn company Chalcroft Ltd announced on Thursday it was going into liquidation because of what it called a “series of events within the business”.
A report by its liquidator, seen by this newspaper, reveals the widespread impact the firm’s collapse is going to have on its suppliers, including many smaller Norfolk firms.
The firm owes a total of £12.3m to around 420 creditors, including £5.8m to suppliers. Some Norfolk businesses are owed six-figure sums.
It also owes £3.2m to its bank, £1.1m to the taxman and £530,000 to staff in wages and redundancy pay.
The bill for staff wages is expected to be footed by taxpayers, but other creditors are unlikely to get much money back.
Ian Kynaston, managing director of Kynaston Contract Services, which is owed around £140,000 by Chalcroft, said: “We are disappointed about the way it has happened. I have been told repeatedly for months by Chalcroft that I would be paid. It is a really sorry state. I don’t expect to get a penny back.”
The report from liquidator Mctear Williams and Wood says it is “uncertain” how much money will be left for creditors and lists the value it could get back from selling the company’s assets as “nil”.
But director Andrew McTear said: “It is likely there will be some money back. There will be a small dividend.”
The report said the directors’ reasons for the company failing were customers taking too long to pay.
And when it took legal action against customers last year to recover debt from them it got back less money than it expected.
That left a £1m hole in its balance sheet.
It said the company’s problems had gone back several years. In 2015 and 2016 it suffered “significant losses” on two projects.
Then in 2016 and 2017 another project overran by more than a year, which hit profits.
Directors decided on February 12 to place all of the Chalcroft group’s companies into liquidation.
A total of 70 jobs are expected to go, including 20 locally around King’s Lynn.
Chalcroft said outstanding projects; including the new H&M in King’s Lynn town centre would be completed.
A meeting of all creditors is expected in March.
•A business built for 40 years
The company was set up by Fred Chalcroft in 1979 and owned by him until he sold it in 2007.
Chalcroft was bought in a management buyout that year by four directors - Mark and David Reeve, Paul Morley and Stephen England.
Mr England resigned as a director last year, while Mark chairs the board, David is finance director and Mr Morely is managing director.
Chalcroft Ltd is owned by a firm called Chalcroft Holdings in which the Reeve brothers are the majority shareholders.
According to Chalcroft Ltd’s 2017 accounts, the firm had a turnover of £58.4m but made a loss of £78,000 that year, a collapse from £537,000 profit in 2016.
But its accounts said it had already secured £30m worth of work for 2018.
Projects include a distribution centre for New Look in Newcastle-Under-Lyme, a business park in Aylesbury and work at Searles Leisure Resort in Hunstanton.
Chalcrofts’ chairman, Mark Reeve, hit the headlines in 2017 over accusations of a “cover up” at the local enterprise partnership.
He was called before a committee of MPs who accused him of a cover up over a deal Chalcroft had to develop land funded by taxpayers.
As well as being chairman of Chalcroft, Mr Reeve was also the chairman of the Cambridgeshire Local Enterprise Partnership (LEP) which used £10m of public money to develop a business park at Alconbury Weald.
Chalcroft also signed a £20m deal with a fresh produce firm to build them a new HQ at the Alconbury Weald park.
North East Cambridgeshire MP Stephen Barclay raised allegations about the way the Cambridgeshire LEP was being run at the start of 2017 which were investigated by the National Audit Office.
They found no evidence that public funds had been misused.
The LEP was dissolved.
•Have you been affected by the collapse of Chalcroft? Contact our reporter Tom Bristow on 01603 77 2834 or email email@example.com