Adjaye brought to brink of insolvency
Shelved projects around the world the cause of Adjaye's financial woes
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.”