London-based fit-out specialist Square Metre has fallen into administration and Stoneforce has been forced into liquidation after being rejected for the coronavirus business loan scheme designed to save business.
Square Metre employed around 50 staff on projects in the capital and south east and had been under pressure in the run up to the coronavirus lockdown. Most staff at the £32m revenue business were furloughed in March as nearly all of its 11 projects were shutdown.
But the firm’s problems continued to build forcing it into administration last week. Owner Steve Hart had steadily built up Square Metre since establishing the business in 2002. The firm specialised in commercial offices, structural alterations, refurbishments and bespoke super-prime residential.
Two years ago, Square Metre took on several former Willmott Dixon staff to broaden its construction capabilities.
As a result, it took on a more challenging £10m office project in Guildford, involving facades retention and greater structural work than previously undertaken.
A source told the Enquirer: “A dispute with the client over leaking cladding delayed payment. Despite Square Metre winning an adjudication it put pressure on cashflow which started to knock-on to suppliers.
“Subcontractors were struggling to get paid and things started to deteriorate.”
Insolvency specialist Opus Restructuring is handling the business.
Watford based fit-out specialist Stoneforce, which mainly worked on high-end residential and commercial projects in London, notified clients and staff that it was entering liquidation on 18 May. Around 60 redundancies have been made but 10 staff have continued to deliver projects via direct contracts with clients.
Director Duane Harvey told Construction News that the 25-year-old business, which had projected turnover of around £36m for 2020, had been a victim of the economic disruption caused by the COVID-19 pandemic. “If we hadn’t had what happened [the shutdown], we’d still be going. That’s the long and short of it,” he said.
Cashflow was squeezed as two jobs were paused in agreement with the client and three more had to be temporarily stopped when subcontractors contracted coronavirus. Harvey said that some clients had slowed payments to Stoneforce as well, adding to the cashflow pressure.
He said that the company tried to access the government’s Coronavirus Business Interruption Loan Scheme (CBILS) through its bank in early April but was rejected. Harvey said uncertainty about when future projects would start had scuppered the deal: “As much as they [the bank] accepted the work was there, when they asked ‘when’s it going to start?’, we couldn’t turn around eight weeks ago and say ‘it’s going to start in three weeks’ time’, because we didn’t know what was happening. Nobody knew when anything was going to restart.”
He added: “If they [the jobs] had been started, we could have got the support and potentially found a way through this.”
The firm’s directors then searched for a private backer to inject fresh capital. Harvey said they found investors who were interested, but they too declined to invest due to the uncertainty of when future jobs would start. Directors will meet next week to formally pass a resolution to liquidate the company.
Harvey said the move to liquidation was “very sad and very disappointing”. He added: “It’s one of those things that should never have happened, but given the current times […] We did all we could, but it was one of those things we were unable to manage our way through.”
In its last set of filed accounts for the year ending 31 December 2018 Stoneforce reported a pre-tax profit of £103,000 on revenue of £23.3m with cash reserves of £574,000. In 2017 the company completed the renovation of The Department Store in Brixton (pictured – Google Street View), south London, a £17m job that won RIBA London and RIBA National awards.
