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Saturday02 August 2014

Adjaye brought to brink of insolvency

David Adjaye
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Shelved projects around the world the cause of Adjaye's financial woes


David Adjaye
Credit: Jacquelyn Martin/AP/PA
David Adjaye

David Adjaye has been forced to turn to insolvency experts to rescue his firm from the brink of financial collapse, despite pumping in half a million pounds of his own money to keep it afloat.

Following a period in which it owed more than a million pounds to creditors, it emerged this week that Adjaye Associates has entered into a Company Voluntary Arrangement (CVA), a deal to stave off insolvency under which it will repay 43 pence in the pound to creditors including Her Majesty’s Revenue & Customs.

Adjaye, who formed Adjaye Associates in 2000 and was shortlisted for the Stirling Prize in 2006 for his Whitechapel Idea Store library, has rapidly developed a reputation as an international architect, opening offices in Berlin and New York and earlier this year winning a leading role to design the National Museum of African American History & Culture in Washington DC.

Despite its profile, there are now fears that that the firm’s financial problems will see it struggle to enter public competitions in future due to rules laid down in the Official Journal of the European Union.

RIBA Director of Professional Services Richard Brindley said it would be difficult for any practice with insolvency problems to win new work.

“Ojeu rules for all public contracts say that bidders can’t be in any form of insolvency. And many private sector clients like to follow similar processes.”

Lane Bednash, partner at insolvency practitioner Valentine & Co which is supervising the CVA, said the arrangement had proved necessary when Adjaye Associates opted to keep staff employed after projects in Birmingham, Abu Dhabi, Kuala Lumpur and India were stopped or delayed.

“[Adjaye] took a calculated risk on the basis those projects would continue, but unfortunately there were problems that the clients hadn’t foreseen,” he said.

Accounts from March 2008 — the most up-to-date available — show that the company made a loss of £59,000 and owed more than £1 million to creditors.

Bednash added that his firm’s aim was to help Adjaye Associates to recover, but warned: “If they don’t comply with the terms of the arrangement we are empowered to begin winding-up proceedings on behalf of the creditors.”

Speaking this week, Adjaye admitted the practice had made some staff redundant last year but insisted it was over the worst of its financial problems and would not be forced to close any part of the business, including the American arm Adjaye Associates Inc.

“The CVA is a reality but it’s nothing to be ashamed of,” he said. “It was difficult last year due to the financial crisis but we’re through it now.

“We have enough work on our books and we’re repaying our CVA very well so we’re in a good place.”

Adjaye Associates entered into the CVA at the end of February, with Adjaye himself the CVA’s main creditor, having put in an unsecured loan of £400,000 and a secured amount of £100,000.

HMRC was the second largest creditor under the deal, owed £150,000 by the practice.

NatWest bank is owed £500,000, a figure not covered by the CVA.

Nigel Coates, professor of architecture at the RCA said he was saddened by the news.

“It’s a real struggle for architects now. Generally speaking, the profession is so difficult that some including myself are turning away from it. David has incredible commissions so I sincerely hope he can carry them through.”

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Readers' comments (15)

  • Will the ARB enforce its rule 9: Architects should ensure that their personal and professional finances are managed prudently. I find that him saying that The CVA is a reality but it’s nothing to be ashamed of, is actually against the principles of the profession - his attitude is very defeatist.

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  • OMFG ! This is amazing but not suprising as the world economy is in free fall... So sad for him...

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  • If the accounts back in March 2008 say the firm owed £1m and made a loss, then his "financial problems" weren't due to the current financial crisis which began later. Might the more reasonable explanation be bad management, terrible risk-taking

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  • "...I watched C-beams glitter in the darkness at Tan Hauser Gate. All those moments will be lost in time like tears in rain. Time to die." Mr Adajy...Adjad...Ajady...DAVID!! I MADE YOU! Is THIS how you repay me for all those tedious soirees, we attended? The tiresome trendies I introduced you to? The lobbying of the self appointed great and good? I had great plans for you my son, oh yes and now...nothing. Oh the humility!

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  • I can't believe what I'm reading. The article states that the CVA was entered into because Adjaye had opted to keep staff employed after projects had been shelved. Surely this should be applauded, not ridiculed. The guy wanted to keep his in-house talent, not let it go. He also pumped £500k of his own money in. Or is it a case of sour grapes because he was actually loyal to his employees, when many others treat their staff as a commodity. I despair for the architectural profession.

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  • An irresponsible rich guy running reckless now has money problems because he ran his business into the ground, trying to put on airs of being "successful" and "international". What a joke; I have zero sympathy for him. Who I feel bad for is the staff he has retained but is probably not paying - or if he is, I bet it is *also* 43 pence to the pound... if he owes money to that many people, is there a doubt he is not keeping up his responsibilities to his employees? I'm sure they don't have a half million pounds lying around.

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  • MR H: did everyone just miss something.... he has 500K of his own money to put in....on an architect's salary....unbelievable. Rumours always abound about certain star architects paying their employees peanuts while drawings a magnificent salary....which go a long way to explaining why a] you want to keep those cheaply paid but hardworking employees in house b]being able to proffer stupendous amountos of cash at a moments notice....I want to be a star architect too.

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  • Mr_H Sounds like he is a bad business man to me!!! Architecture is a business not a charity to the staff. It is irresponsible business practice. When are architects going to wake up. The thing that amuses me most about all this is all the press he recieves on his buildings. All the students will be wanting to be like him, when in fact in 2008 he was making a loss. When is everyone going to wake up to the fact that this is a business we are in, not charity work to anyone, inc. staff.

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  • Well said Mr_H. As for Darth Burdett, since when has it been funny to laugh at the man with the African surname?

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  • David Adjaye has great support in the artistic communities and really, like many other companies, values architects over software. He may be trendy but actually, most of the establishment handing out the funding consider themselves trendy. I know that there are lots of art events planned around his work, October time, Kings Cross...maybe by then, many small and medium sized companies will have received the long promised motivation and access to building schools, colleges and social housing for the future that at the present time seems to be stuck with the Quangoes. Keep your eyes peeled for the way these quangoes will use sleight of hand to rediistribute the taxpaying nation's assets...

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