Late payment woes are stopping firm from finding new business, says partner

Troubled architect Austin-Smith:Lord fears it may suffer millions of pounds of lost revenue because of the strife caused by late payments for a massive project in Abu Dhabi.

Last week, the company, lead consultant on the Qasr al-Hosn cultural quarter, entered a voluntary agreement with more than 100 creditors, including Arup, Buro Four, Mouchel and Mott MacDonald, to pay them the remaining money owed to them.

Austin-Smith:Lord (ASL) is owed £7.85m by client the Abu Dhabi Authority for Culture & Heritage for work on the stalled scheme. ASL, in turn, owes much of this amount to creditors, who agreed last Friday to delay the payment for up to two years.

Jennifer Dixon, partner at ASL, said it had suffered financially from the episode due to work lost elsewhere.

“We have hardly been generating any new business for the last three months because partners have been fire fighting and managing creditors,” she said.
“The real cost is in the hundreds of thousands if not millions.”

Dixon expressed hope that the full fees would be paid by the state-backed client early in the new year. ASL has received payments of £2.4m and £750,000 in recent weeks to bring the debt down from £11.3m.

“We do have a reasonably strong underlying order book and a strong brand,” Dixon added. “We were able to demonstrate to our company voluntary agreement supervisor [BDO] and our creditors that we could stay in business and collect the debt.”

Building understands foreign office minister Alistair Burt has been among a number of members of the British government who have been negotiating a settlement from the Abu Dhabi government on ASL’s behalf.

All 65 remaining staff at ASL are also owed between a month-and-a-half and two months’ salary because of the firm’s financial squeeze.

Dixon said: “Everyone has had their disposable income wiped out; they are down to living on a shoestring. Some have not been able to afford to get to work once they have paid their mortgage.”

But ASL partner Neil Chapman defended the role of the firm’s management in racking up the debts. “It doesn’t take long to get into a multimillion-pound situation when you are invoicing for millions each month,” he said.

He emphasised that ASL had had a long-standing relationship with the Abu Dhabi client.

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