In its 25-year-history, Stoneforce enjoyed the big finishes on the high-end residential and commercial jobs.
Director Duane Murray described completing an ambitious £17m refurbishment of an abandoned department store in Brixton in 2017 as “euphoric”.
At the start of March, another big finish was in sight after the contractor spent three years on a grand Mayfair house. “We’ve been finishing a job at Selwyn House, which is next to Clarence House,” Murray says. “We’ve been on it for three years and near enough put a triple basement in there. It’s going to be truly fantastic once it’s finished. We were two months away from completion. Now, we’re not going to be there to see the climax of it.”
Like others across the UK, Stoneforce was hit hard by the coronavirus pandemic. Closed sites, material shortages and sick workers brought activity to a halt. The money began to run out and fresh finance was out of reach. On 18 May, Stoneforce’s directors called clients and staff with the news: the company was going into liquidation.
A bright future, snatched away
Stoneforce started the year “very, very bright”, according to Murray. “We had a pipeline this year of about £36m,” he says. The company was carrying over about £19m of work from last year, and by June they had expected to be on site with jobs worth a further £12m-13m.
The company had been profitable in 2019, Murray says, and the Watford-based contractor was finding growth opportunities outside of its traditional London and South East patch. The North, in particular, held promise for the business.
As March rolled around the company was close to starting some “significant” jobs in London with “nice margins”, Murray said.
But as the month wore on, COVID-19 spread throughout the UK with cases and deaths growing exponentially. Murray said the pandemic hammered Stoneforce in three ways.
“First we had clients being a bit reluctant to continue […] and wanting to review where they were going for their own reasons,” Murray says. “Secondly we had a few outbreaks on site with our subcontractors. We implemented all the guidelines that were expected of us, but we were forced to cease work on three jobs.
“And then we had two jobs that were suspended, which was a mutual decision, based on limited supplies being available and subcontractors beginning to dictate what was happening on site. We might have the management on site, but if we can’t get the subcontractors to work, we’re not progressing.”
“We had a few outbreaks on site with our subcontractors. We implemented all the guidelines that were expected of us, but we were forced to cease work on three jobs”
Suspending the jobs was not a clear-cut choice, but a trade-off between short-term cashflow versus long-term commercial risks. Murray says the mutual agreement to suspend work would avoid any penalties for delays from the client or having to argue loss and expense claims further down the line. “That’s protecting the contractual position,” he says, “but it’s not moving on with the project so there’s no turnover; you’re not making any money”.
Some clients also started to get lax on making payment, adding further pressure to Stoneforce’s cashflow.
Murray says: “Unfortunately, some people see these times as an opportunity not to pay you as quickly and as promptly the amount they should. And I get that to some degree, because they’ve probably had some difficulties and were looking to see how they could keep with position as best as possible. But you put all that in a pot, and that’s why we are where we are now.”
With cash drying up but overhead costs, including salaries for around 60 staff, to pay, the company went in search of fresh funds. It’s first port of call was the government’s Coronavirus Business Interruption Loan Scheme (CBILS). But the uncertainty over when new jobs would start saw the banks refuse to authorise the loans, Murray claims.
A final pitch was made to the private sector for a lifeline to get the company through the next few months. But initial interest could not be converted into financial commitments. The rescue effort was once again defeated by the uncertainty of when work would pick up.
With all avenues exhausted, the message that Stoneforce was shutting down after 25 years in business went out on 18 May.
‘It should never have happened’
It seems shocking that a few weeks of shut-down sites could push a firm over the edge, but Murray says that was Stoneforce’s fate: “If we hadn’t had what happened [the shut down], we’d still be going. That’s the long and short of it.”
He adds: “Everybody we’ve spoken to, including subcontractors potentially being owed sums of money, not one person has come back and been critical of what’s happened, there was no mis-management. Everybody’s been extremely sad that we’re not there anymore.”
Missing out on the government-backed loan effectively sealed the company’s fate, but Murray is stoic about the outcome for Stoneforce. He questions, however, whether companies that shut sites and continued to pay people have been hit harder. “I’m not saying what the government did to support the building industry didn’t help, because it did,” he says, “and you can always say it [the support measures] aren’t going to be right for everybody; I get all that. But I think some of the people that have been affected the worst, were some of the good people.”
“Everybody we’ve spoken to, including subcontractors potentially being owed sums of money, not one person has come back and been critical of what’s happened, there was no mis-management. Everybody’s been extremely sad that we’re not there anymore”
In an industry where the margin between success and collapse can be fine, Murray warns more firms could be pushed to the brink in the coming months, especially in cases where clients also find themselves squeezed. Earlier agreements over force majeure in particular might prove to be less than conclusive. Murray says: “I think in two or three months’ time, clients are going to be talking to their QSs and contract administrators and saying, ‘I don’t believe it was force majeure; they were in delay’. They’re certainly not going to be looking to give any extension of time or loss and expense [to contractors].”
For Stoneforce, it’s the end of road. “We won’t be rising out of the ashes in any form. Each of us will be going on individually to do something else, no doubt. But there won’t be a Stoneforce two, let’s put it that way,” Murray says.
The coronavirus pandemic has been a catastrophic and unprecedented event. For some, like Stoneforce, it has proved too much. “It’s one of those things that should never have happened, but given the current times […]
“We did all we could, but it was one of those things we were unable to manage our way through, sadly.”
