Cosmur Construction has gone into liquidation after a rescue plan failed, with creditors set to lose out on £11m.
The London-based contractor suffered significant cashflow problems at the end of 2022 after a major unnamed client withheld payment, according to its final accounts.
It entered a company voluntary arrangement (CVA) in May 2023, around the time it celebrated its 50th birthday. Under a CVA, a struggling company is able to stay in business so it can pay off its debts in small amounts over a period of time.
However, overseers RSM told Cosmur in July it had breached the terms of the CVA after after it failed to make a regular monthly payment.
Company directors concluded in a board meeting on 3 September that they lacked the funds to make the payment, and asked shareholders to allow the company to enter voluntary liquidation. The CVA ended the same day.
Shareholders nominated Deviesh Raikundalia and Tyrone Courtman of RSM UK as joint liquidators. Cosmur officially entered liquidation on 27 September.
Ahead of this, in an initial statement of affairs on 20 September, Raikundalia and Courtman identified around 480 creditors, the bulk of whom were trade creditors, who were owed a total of £8.3m. A further 20 creditors with claims totalling £2.7m came forward after the liquidators’ initial assessment, bringing the total to £11m.
None of those creditors will receive any payout, as all remaining funds will be used to pay back HMRC, said the liquidators.
The company estimated it could pay out £2m to creditors during the CVA period – it ultimately delivered £1m. During that period it paid out £79,000 in retentions, about 85 per cent of what it held.
In its final accounts, covering the 18 months up to 31 July 2022, Cosmur reported a £904,000 pre-tax loss on a £33m turnover.
Directors wrote that although it had ended the financial year in a stable position, its situation worsened in the second half of 2022 and early 2023, largely due to project delays and inflation on fixed-price contracts.
Projects won in 2019 and 2020 were delayed into 2022 and 2023, leaving the firm vulnerable to inflation. In addition, Cosmur had agreed fixed-price contracts with its clients but hired subcontractors on variable contracts, putting pressure on cashflow.
The firm managed to renegotiate some contracts with clients but were unsuccessful in others. Directors wrote that while some clients agreed to help with increased costs, others were “unwilling to engage”.
Cosmur’s woes culminated in “severe” cashflow problems when a major client withheld payment at the end of 2022, which directors said caused further delays, worsening the firm’s liquidity issues and ultimately leading to the CVA.
The value of its investment property had also shrunk following “world events and government actions” in 2022 and 2023, directors wrote.
Cosmur was based in Queen’s Park, north west London, and specialised in new-build and refurbishment projects in London and the South East. The firm held spots on several high-value frameworks, including the Procure Partnership, Orbis, Fusion 21 and London Construction Procurement Programme.
