黑洞社区

A 拢2m payment dispute between main contractor Galliford Try and subcontractor MPG resulting from delays on construction of the London 2012 athletes鈥� village has forced the specialist to the brink of insolvency.

MPG - which turned over 拢46.3m in the year to 31 December 2011 - is working with accountant MHA MacIntyre Hudson to implement a company voluntary arrangement (CVA) as it is unable to pay its debts as and when they fall due.

A CVA would give MPG some protection from creditors and allow it to continue to trade.MPG told 黑洞社区 the 鈥減rotracted dispute with Galliford Try since the start of the year鈥� was the 鈥渄ominant鈥� reason for it filing for a CVA.

Galliford Try was ordered to pay a sum - understood to be around 拢350,000 - to MPG by an adjudicator this month, but MPG said it received correspondence from Galliford Try last week saying it 鈥渞efused to pay this鈥�. MPG will seek to enforce the adjudication decision in court and the firm is considering further proceedings to recoup the full 拢2m it estimates it is owed.

An MPG spokesperson said: 鈥淲e are not surprised by Galliford Try鈥檚 reaction.鈥�

Galliford Try is understood to be involved in a number of pay disputes with subcontractors on the athletes鈥� village job.

The disputes relate to delays on the final two plots of the village, N13 and N26, which together are worth 拢80m and contained 423 units, according to construction data company Barbour ABI.

In April, 黑洞社区 revealed that Galliford Try at the time faced legal action from three subcontractors resulting from problems on the job, including MPG, that could amount to more than 拢11m.

MPG鈥檚 creditors will vote on accepting the CVA proposal at a meeting on 4 December. If they reject it this could force MPG into administration

MPG owes 拢10.2m to various parties, including 拢2.3m to trade creditors and 拢1.4m in retentions, according to a proposals report drawn up by MPG and MHA MacIntyre Hudson.

A CVA, a legal agreement with a company鈥檚 creditors on a schedule to repay debts, would buy MPG time to generate the cash to pay its creditors, who would be paid in dividends once sufficient funds are brought in.

MPG expects these dividends to be at least 32p in the pound, a figure the report says will rise should their claim against Galliford Try be successful.

The report explains the athletes鈥� village dispute is one of two factors behind seeking a CVA.

The other factor is 鈥渇urther claims and monies withheld on projects in West Sussex and Hertfordshire鈥�.

Several firms have gone bust on the athletes鈥� village project, including contractor P Elliott and subcontractors United AG and Trent Concrete.

Galliford Try declined to comment.