A client chasing a defunct fit-out company for £36m will be able to pursue a legal claim for alleged defects on a luxury Mayfair development.
Fit-out specialist Beck Interiors worked for Eros under a £40.2m contract for The Residence, Mandarin Oriental in London’s Mayfair.
The £140m-turnover contractor, which became an employee-ownership trust in 2021, worked on luxury hospitality, leisure, residential and museum projects.
A new report from Beck Interiors administrators Begbies Traynor, published last Friday (29 August), revealed that lawyers for the defunct company had reached an agreement to enable the dispute to be heard.
Companies in administration have protection from claims under a “statutory moratorium” process. But this will be suspended so a court can rule on whether Eros has a claim.
“At the same time the company’s ability to recover from Eros any sums found to be owed by them has been preserved,” the report said.
The full terms of the settlement were subject to confidentiality provisions, it added.
South-east London-headquartered Beck went under in July last year. A subsequent report from Begbies Traynor cited liquidity challenges caused by a dispute with a client, which was not named, and was said to have withheld £16m.
Beck and Eros had been locked in a dispute over alleged defects and delays on The Residence, with four adjudications having been sought by the client from March 2024 until just before the company’s collapse. Beck sought two adjudications in the same period.
A legal ruling from June 2024, when Beck failed in a bid to obtain an injunction against Eros to stop it applying for any more adjudications, shows that Beck valued its works at £102.9m and the client had paid £73.2m.
Among the disputed items was Eros claiming £3.8m for delays on the hotel phase of the project and £15.5m for additional financing costs it claimed to have incurred because of a delay in selling the development’s luxury apartments.
Eros launched a claim in the Technology and Construction Court less than a month before Beck went under.
Administrators estimated that Eros owed the specialist £6m, but Eros filed a counterclaim with Begbies Traynor for £35.9m.
Elsewhere, the latest report stated that administrators believed Beck was owed around £16m in outstanding contract debts and retentions.
“It has become apparent that a large proportion of the contract debts and retentions owed as at the date of our appointment have been subject to disputes and counterclaims,” it said, meaning the amount that will be recovered is set to be much lower than first thought.
Unsecured creditors have submitted claims for more than £113.3m, Begbies Traynor said, compared to an initially expected £69.3m.
The total includes the disputed £35.9m claim from Eros.
HMRC is estimated to be owed around £7m, while Barclays is seeking £2.7m.
The amount that will be available for creditors is not yet known.
It was revealed last year that the firm was nearly bought by a subsidiary of Spanish engineering giant Acciona before its collapse.
A pre-pack sale of its contract at the Whiteley Hotel in London’s West End was sold soon after the administration. The facility became the first UK location of Thai-owned multinational resort Six Senses this summer.
Hub Consulting, controlled by Beck MBI Ltd, an entity that also had significant control of Beck Interiors and has been run by several current or former directors, bought the contract and assets on the project for £200,000, saving 21 jobs.
Another 21 jobs were saved after Beck’s contract to refurbish London’s Dorchester Hotel was sold for £100,000 to Elemental Newco 2 Ltd, a new company set up by directors of Beck Interiors.
A total of 148 people were made redundant after the company collapsed.
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Ian Weinfass