Architect says it lost ‘hundreds of thousands’, which left it unable to pay staff

Austin-Smith Lord this week admitted the losses to its business are “huge”, following weeks of unrest caused by non-payment from its Abu Dhabi client.

Last Friday the 62-year-old practice entered into a company voluntary agreement (CVA), which will see it trade under a business plan agreed with creditors including Arup, Buro Four and its own redundant staff.

Jennifer Dixon, a partner at Austin-Smith Lord’s London office, told BD: “We could demonstrate a viable underlying plan, and the creditors will benefit much more from us being around to collect the debts.”

She added: “But the losses to the business are high — in their hundreds of thousands. Most of the money earned by the partners was tied up in working capital and most of that is gone now.”

Austin-Smith Lord was forced to enter into the CVA after it emerged last month that its Abu Dhabi client, the Abu Dhabi Authority for Culture & Heritage, owed it more than £11.3 million. The practice was working on a cultural quarter in the city centre.

It has been agreed that the creditors will be paid 85 p for every £1 they are owed. Meanwhile, Austin-Smith Lord will continue to run four “lean practices”, and in the coming weeks will consolidate its North-west offices into one.

Dixon said: “The fallout of what’s happened is inevitably tough and what kind of practice it will turn out to be, I don’t know. The collateral damage in that respect has been immense.”

Dixon revealed that the practice had not been paid for work on the centre since the start of 2011 . “Payment delays crept in and by June it was clear that if we didn’t get [money] flowing then it would be very serious,” she said.

It has caused a lot of stress. There have been a lot of tears — it’s been harrowing

Jennifer Dixon

But she admitted it was the firm’s unpaid staff who were “the real losers”, saying: “They were left with unpaid salaries, which we’re struggling to pay. It has caused a lot of stress. There’ve been a lot of tears — it’s been harrowing.

“The toughest thing to deal with by far has been the angry staff. I’ll see when we’re in clear water if I can reconcile the way some people have behaved.”

Meanwhile, partners at the firm said talks with a potential buyer were ongoing. “There are a range of opportunities on the table: taking the practice in whole, or just our work abroad,” said partner Neil Chapman. “We need to see what’s best going to suit both parties.”