Cardy Construction. £18million debt. Liquidation & Pleasurama

The publication of insolvency practitioners, RSM Restructuring LLP’s, report into the collapse of building contractors Cardy Construction in July of this year, with a loss of approximately 200 jobs and debts estimated to be £18million is, according to ex- Thanet councillor Ian Driver, “devastating news for former Cardy staff and Kent  based businesses and also raises  extremely serious questions about  Thanet Council’s (TDC)  dealings with this failed company over the Ramsgate seafront Pleasurama development”.
The report, published on the Companies House website, blames a series of unspecified arbitration claims against Cardy, totalling  £3million, for reducing  the company’s liquidity to a level at which “it could no longer meet its ongoing cash requirements and pay its debts as they fell due”. The administrators will be recommending, at a creditors meeting to be held in London today (Wednesday 12 October),  that all available funds recovered from the non-trading  company are distributed to creditors and that the company is then dissolved via a Creditors Voluntary Liquidation process.
Documents published on the Companies House website record almost a thousand creditor claims against the company, with more likely to be in the pipeline. Many of the claims are from small/ medium sized Kent-based businesses ranging from several £100s to £10s of thousands. The administrators have identified NatWest Bank, which is owed £347,953, as a secured creditor and former employees, who are owed £165,274 in unpaid wages, as preferential creditors. This leaves an estimated £556,000 to be shared out amongst the remaining creditors including HM Revenue and Customs who alone are owed £304,000 in unpaid taxes and national insurance.

Said Driver “the collapse of Cardy Construction will have a devastating impact upon the 200 people who worked loyally for the company and the hundreds of businesses in Kent and elsewhere who will now have to  absorb  losses which could easily destroy some of them. This is appalling news for Kent’s economy which is ill-placed to deal with a multi-£million hit like this”.
He added “I’m extremely concerned about these revelations and the implications that they have for the controversial Ramsgate seafront Pleasurama development. In March 2015 Thanet Council's then Leader Cllr Iris Johnston and Cabinet Finance boss Cllr Rick Everitt signed on behalf of TDC a contract with Cardy Construction to become the builder of this large  £30million development which includes 107 luxury flats and 60 bed hotel. The question must now be asked what due diligence did TDC and  Cllrs Johnston and Everitt conduct  into Cardy Construction before the contract was signed? Was TDC aware of the arbitration cases pending against Cardy and their impact on the company’s financial  stability? If not why not?”

He went to say “Debts of £18million don’t accumulate suddenly  overnight. It took many months for this terrible situation to develop and the warning signs must have been clear during  2014/15 when TDC was negotiating with Cardy. Did TDC spot these signs? If they did  what action was taken to protect TDCs interests? If they didn’t why not?
“I’m also extremely concerned by the actions of Cardy Construction’s managing director, Mike Stannard. According to the administrators report Stannard, and I presume his fellow directors, were aware of  Cardy Construction’s financial troubles  long before it entered administration. So why, just a week before the company was taken over by administrators RSM Restructuring LLP, did  Stannard buy the freehold of the Pleaurama site, as previously agreed by the Labour controlled council in 2015, using  £3million loaned to him by the  financial backer of the discredited former Pleasurama developers SFP Ventures, Mr Colin Hill. It seems very strange to me that at the very time that the company which was going to build the Pleasurama development was going out of business, its managing director buys  land which it would have been unable to develop.  It simply doesn’t make business sense to me. I think Mr Stannard and Mr Hill need to provide the people of Ramsgate with an explanation about this mysterious transaction.

“Furthermore  why did TDC and its new political bosses UKIP who had seized control of the council from Labour in the   May 2015 elections, allow the previously agreed sale of the Pleasurama freehold to go ahead? Surely the council and its political leadership must have known just before the land sale happened in July 2016  that Cardy was in serious financial difficulties. Surely the right thing to have done, if they did know, would have been to put a hold on the sale of the land until the situation had been properly investigated by TDC and its legal advisers. Sadly nothing was done. The land is now under the control of a company which is managed by a long-standing colleague of SFP’s Shaun Keegan and Colin Hill and there is a loan charge on the land for £3million  from offshore Panamanian registered Mintal Services Inc. which is linked  to Colin Hill”.

Labour Councillors Everitt & Johnston celebrate in March 2015  doing the deal with Cardy's Stannard . If only due diligence had been more robust

“Had the council and its Labour and UKIP political bosses, managed a much more robust and comprehensive due diligence of Cardy then I believe that it would have been  highly unlikely that the Pleasurama development contract with this  company would ever have been signed and highly unlikely that the freehold of the land would have been sold to Stannard.  We now have the appalling situation where,  because of what appears to me to have been  gross incompetence and mismanagement  by TDC and its political bosses, a large chunk of expensive, and  previously publically owned, seafront land has been lost forever to an offshore Panamanian company.  These disturbing revelations add yet further backing to Thanet South MP Craig MacKinlay’s call for a an independent inquiry into the shameful Pleasurama debacle”.

As my heroes the Sex Pistols Said Do you ever get the feeling you've been cheated?