Administrators have been called in to a Liverpool firm behind a costly and controversial training academy project that was subsequently highlighted in the damning Max Caller report.
Officials from Teneo Restructuring Ltd are now handling the administration process for Vital Infrastructure Asset Management (VIAM), a civil engineering, utilities and construction firm previously known as King Construction.
Teneo’s senior managing directors Daniel Smith and Clare Boardman were appointed on June 1, and in a statement put the move down to cashflow problems for the Speke-based company.
The firm, which employs 300 people, was behind the failed Tarmacademy training and apprenticeship scheme that never came off – a project highlighted as a case study in Max Caller’s recent damning report into the failings of Liverpool Council. The firm has since come under new management.
A statement from Mr Smith said: “This is unfortunately a very challenging period for the group’s stakeholders, and in particular its employees.
“Despite the best efforts of the directors, the group was unable to generate the cash needed to sustain its trading operations. Our immediate focus is on supporting the group’s employees to ensure all relevant claims are submitted as promptly as possible.”
According to Teneo, VIAM’s trading performance was impacted by disputes with “certain customers” leading to receipts being withheld.
That led to “severe liquidity pressure”, and circumstances which required the group to be placed into administration, the statement added.
Tarmacademy was one of the deals looked at by inspectors for Max Caller’s Best Value report published earlier this year.
The report said the move saw the council spend more than £4m on industrial land off Derby Road when one valuation suggested it could have paid as little as £1.22m for the land needed for the project.
It was prompted by proposals in 2015 from Knowsley Construction Ltd, trading as King Construction, to develop a training site alongside an asphalt plant that was to be run by a company called Cemex.
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Labelled the Tarmacademy, it was pitched as a project that would create 45 new jobs and help 1,000 people find work and apprenticeships over a five year period.
Six years later, the asphalt plant has been delivered but no training academy exists on the site.
The original budget set for the council’s involvement was £3.5m.
The inspection report said no reasoning could be found for how that figure was reached or why the council should get involved and that backing was given without explanation as to why the companies involved “should receive such preferential treatment and support”.
In the years that followed the council’s budget spiralled by £450,000 – an increase signed off on the basis of a “flawed” report.
The plan appeared to have been to recoup the money borrowed for the land within three years through rents, lease and advertising deals linked to the site.
However, the council ended up footing costs of £350,000 a year – a figure far in excess of the annual fees it is now receiving from the land.
Questions were raised by inspectors over a lack of due diligence as the deal progressed and negotiations avoiding scrutiny through being “declared to be commercially sensitive and so not publicised”.
The valuation of one parcel of land was even said to have been based on a report inspectors could find no evidence existed. The company said to have provided it denied any knowledge of it. Inspectors referred to it as a “phantom” valuation.
Summing up the saga, the Caller inspection report concluded: “The debt incurred and transactions entered into have not been authorised by cabinet.
“Despite the fundamental changes from the position agreed in 2015 there has been no further reference to cabinet to consider the matter and to determine next steps.”
The ECHO also revealed in March that an executive from King Construction used the name of a very well known politician during negotiations with Liverpool Council.
The executive who sent the email no longer works for King Construction as it changed ownership during that period.
That change came in the form of a management buyout of the firm, led by managing director Dave Prescott, with NVM Private Equity investing £11.6m.
At the time, Mr Prescott said: “We are all looking forward to the next chapter in the development of King Construction and working alongside NVM in the future.
“This is a wonderful opportunity for everyone involved, including our customers. With a proven track record in partnering with management teams to drive growth, NVM’s support will enable us to unlock the potential of our business, delivering greater service and value for our customers”.