Collapsed firm Banner 'had just £6,000 in bank'

Banner Holdings, the former contractor on Rafael Viñoly’s troubled £28m Colchester arts centre, was left with just £5,920 in the bank and no overdraft, it has emerged.

Gary Marshall, the administrator appointed on 4 June, said creditors were “not very likely” to get anything back because the £13m-turnover firm had no assets.

According to Marshall’s report, the Chesterfield firm, which owes £3.1m to trade creditors, had only £5,920 in the bank. The firm had an overdraft facility of £1.6m with Lloyds TSB but, in the week that chancellor George Osborne renewed his plea for banks to lend to smaller businesses, it has emerged that Banner’s bank had reduced its overdraft to zero over the past 18 months.

The firm had hoped to recoup money from its legal battle with Colchester council over the arts centre (pictured), which was designed by Rafael Viñoly. The council kicked Banner off the project last year after a row about work being behind schedule and sub-standard. The contractor sought £1.3m in compensation; the council then launched a counterclaim of £4m.

The administrator said Banner’s claim was abandoned because it couldn’t meet an outstanding legal bill of £300,000. He added that the project “contributed significantly” to Banner’s demise.

His report said: “The directors are of the view that the company’s ability to generate work had been adversely affected by the negative publicity generated from the arts centre. In particular, there appeared to be a perception among the wider business community that [the council] terminated the company on the basis of poor performance, though the company denies this.

“The directors have identified five tenders, which, in their belief, the company ’won’ based on price; however, such contracts were not ultimately awarded in its favour. Had the company been successful in winning these contracts, then about £10m would have been added to the company’s order book.”

The report also reveals that Banner tried to merge with Altrincham-based M&E contractor Bowdon Industries in March. Bowdon acquired a 50% share in Banner at that point, but following a legal adjudication that suggested Banner would lose its arts centre claim, Bowdon provided no further investment.

When the administrator was appointed, Banner had six contracts on its books, but five of those were terminated by clients and the remaining job is expected to be given to a different firm.

Mace is now the project manager on the arts centre, which will cost £28m - up from an original estimate of £17m - and will be finished in September 2011, three years late.