Bickerton Construction went from thriving regional contractor to emaciated corpse in a matter of months. Tom Broughton investigates what many creditors suspect to be a very suspicious death 鈥�
On the bitterly cold, overcast afternoon of Thursday 17 January, a group of grim-looking people file into the Holiday Inn on Welbeck Street in the West End of London. All have one thing in common: they are owed money by Bickerton, the regional contractor that collapsed in mysterious circumstances just before Christmas. Between them, unsecured creditors are out of pocket by more than 拢4.5m.

Inside the creditors meeting, two Bickerton directors, Jonathan Bradley-Hoare and Stephen Frost, face about 30 of their 900 or so creditors. Most are subcontractors, but one is a representative from the Royal Sun Alliance, which is rumoured to be faced with a 拢1.2m hit. The mood of the meeting fluctuates as outbursts of anger 鈥� "There's rats running through the lot of you" 鈥� give way to more rational attempts to understand what happened. The smooth-talking Bradley-Hoare does his best to placate his audience, and bit by bit, the details of the collapse emerge.

Afterwards, Jonathan Forbes Brown, founder of a Braintree roofing firm called Imperial, reflects on what he has learned. The first thing is that the situation is even worse than he thought. The creditors' report, distributed at the meeting, puts Bickerton's realisable assets at about one-sixth of its debts, and he is owed 拢30,000. "This is going to hurt me quite bad," he says. The second thing is that the events leading up to the collapse do not seem to make sense. "You expect to take a hit when firms go bust, but with Bickerton the events just don't seem to add up. This is going to need careful scrutiny; the reasons for the collapse just don't seem right."

Forbes Brown's intuition may be shared by the Serious Fraud Office 鈥� creditors were told that the liquidator would be passing details of its investigation to the SFO. If it does investigate, it will find a complex story involving a web of financial transactions, dozens of companies and players, a DTI investigation and a disqualified director.

What is easier to understand is the consequences for Bickerton and its staff. The company was a highly respected family builder with a 70-year history of quality work, mostly public sector projects in the 拢1-4m bracket. When it was shortlisted for a 好色先生TV Award in 1997, judges commented that it was turning over about 拢30m, "going from strength to strength", and that it "planned to float on the stock market".

Then, in the space of six months the staff had their morale "shot to bits". Contracts inexplicably fell through and the company was "brought to its knees", according to one former employee. The firm's 75 workers are now out of jobs, the St Albans headquarters are empty and sites around London stand idle. On Talacre Road in Kentish town, north London, out-of-pocket subcontractors have expressed their frustration by dumping tons of rubbish. Others have raided their own sites to reclaim materials.

Any SFO inquiry will probably begin with the situation of the company five years ago. The 好色先生TV judges' ominous reference to a stock exchange flotation was followed in 1997 by a listing on the alternative investment market. Then, in early 2000, the Bickerton family sold out to Artisan, another, larger, AIM-listed construction group. This was owned by a man who was to become an important player in the Bickerton affair: businessman Stephen Dean.

Around the same time, Artisan acquired another Hertfordshire contractor, Driver Construction, and a property firm, Gryphon Estates. Gryphon became a wholly owned subsidiary of Bickerton.

You expect to take a hit when firms go bust, but with Bickerton the events don鈥檛 seem to add up

Jonathan Forbes Brown, creditor

In July 2001, 18 months after that company structure was established, a businessman called John Aviss entered the story. Aviss and Dean embarked on a complex series of transactions (see the afctfile below for a blow-by-blow account). The upshot was that Aviss agreed to buy Bickerton, Driver and Gryphon from Artisan for 拢2.8m. Of this amount, 拢1.28m was paid for Bickerton. Aviss handed over 拢780,000 upfront and was due to pay the remaining 拢500,000 at a later date. In fact, Aviss did not do this, citing "problems" with Bickerton's accounts.

Shortly after the sale, the first indications arose that things were seriously wrong. First, it emerged that Bickerton had owed 拢426,684 in corporation tax at the time of the sale. Then, in September, chartered accountant Bradley-Hoare was appointed to the Bickerton board by Aviss. He audited the company and discovered that Artisan had taken 拢1.4m out of the contractor in management charges prior to the sale. That was more than the price of the company and, as Bradley-Hoare put it in the creditors' report, "about 拢1m in excess of the charge that 鈥� should have [been] taken".

Dean confirms that he took a dividend out of Bickerton but stresses that it was carried out legitimately.

A third body-blow to Bickerton took the form of two problem contracts with Artisan that were negotiated before the sale. Bradley-Hoare alleges that these amounted to a liability of about 拢1m. One was a job in Watford for which Artisan did not pay Bickerton the full amount claimed. The other was an 拢8m refurbishment at the United Glasshouse building in St Albans; this deal, which was part of Bickerton's future order book, was axed after the sale was completed.

Chris Musselle, Artisan's finance director, says these contracts are irrelevant to Bickerton's collapse. "They did not contribute to the downfall of Bickerton in a significant way," he insists.

By October, Bickerton's situation was becoming critical 鈥� Bradley-Hoare told the creditors meeting that, in his opinion, the firm was "technically insolvent". Understandably, the subcontractors demanded to know why they were still working on Bickerton contracts two months after the client knew it would have difficulty paying them. No explanation was given. They were also angry to learn that departing staff had been given the chance to buy cars, mobiles and laptops "at the going rate".

It was in October that Bickerton began shedding staff 鈥� about 30 posts were cut in the course of the month. Bradley-Hoare claims that the company was overstaffed and that these cuts were essential. Among those who went were Ray McCauley, Bickerton's managing director, and Alan Vaux, its finance director. Both resigned in protest at the redundancies that Aviss was forcing them to implement. And both are now pursuing Bickerton for constructive dismissal.

The share transferral had the effect of taking 拢921,767 off the balance sheet of Bickerton Construction

Creditors鈥� report commenting on an asset transfer made one month before Bickerton collapsed

In the creditors' report, Bradley-Hoare blames the "existing directors" for failing to spot that Bickerton stood to lose money on some of its contracts. The report states that, in the opinion of Bradley-Hoare, "existing [Bickerton] directors did not pay careful enough attention to the company's profitability when dealing with the negotiations in respect of new contracts."

McCauley refused to comment, and Vaux was unavailable at the time 好色先生TV went to press.

By November, Bickerton's situation was beyond hope. It was at this point that the shares of its property subsidiary, Gryphon Estates, were transferred to Driver Contracting 鈥� a shell company (separate from Driver Construction) set up to receive them. This firm has two directors: Bradley-Hoare and Stephen Frost, both of whom were also Bickerton directors. Driver incurred a debt for the transactions.

The creditors' report says the share transferral had the effect of "taking 拢921,767 off the balance sheet of Bickerton Construction". The report says this transaction will need careful investigation by the liquidator. The creditors' report states that "taking into account the net value of Gryphon Estates Limited 鈥� some 拢330,000 will eventually be realised" of this debt.

In December last year, Bickerton collapsed. Remaining staff at the St Albans offices were sent home on Christmas leave, never to return.

The Bickerton Affair is now being investigated by Gerald Edelman, a chartered accountancy firm that has been appointed official liquidator.

A liquidation committee has been formed, consisting of the legal representatives of creditors, and the Inland Revenue. It will meet in three months' time, by which time Gerald Edelman should have produced a report into Bickerton's activities.

The key players

John Aviss
Set up holding company called Infiniteland to buy Bickerton. He was the owner when the contractor collapsed in December 2001. He was also the owner of the Mea Corporation before its collapse. Stephen Dean
Chairman of construction group Artisan, also chairman of AIM-listed Bickerton Group (separate from Bickerton Construction), which he has renamed to become his own shell company Envesta. Jonathan Bradley-Hoare
Director at Bickerton Construction, Driver Construction and Driver Contracting. He is also the man who faced down the Bickerton creditors at last week鈥檚 meeting.

The tangled web: how John Aviss acquired Bickerton

John Aviss bought Bickerton as part of a highly complex financial deal. In August 2000, Aviss and his firm Total Environmental Maintenance Services, came together with electrical contractor CJ Bartley and Rotrax Engineering services to form the Mea Corporation. Mea was billed as a glamorous national M&E contractor that would be floated on the stockmarket. John Aviss was the controlling shareholder in Mea, but had a problem. He did not have the funds to create his own listed company, so to carry out his plans for Mea, he needed an AIM-listed firm to 鈥渞everse鈥� it into. Stephen Dean, owner of construction group Artisan, had the solution. Dean owned Bickerton 鈥� both the contractor, Bickerton Construction Ltd, and a shell company, Bickerton Group plc. Aviss decided that he was going to try to use the Bickerton shell company 鈥� which Dean had renamed Envesta 鈥� to float Mea. Aviss used a businessman called Bill Berry to contact Dean. Berry was head of Leapfrog, a Wendover-based management consultancy; he was also banned from being a director until May 2004 and had two suspended two-year prison sentences for trading with intent to defraud and being in undischarged bankruptcy while managing a company. A series of meetings between Dean and Aviss were set up to arrange the flotation of Mea using Envesta. Dean agreed to a deal, but as part of the arrangement, Mea would have to acquire Bickerton Construction, Driver Construction and Gryphon Estates from the Artisan Group. Crucially, the deal involved Aviss signing a legally binding guarantee that he would personally acquire the three businesses whether the Mea flotation went ahead or not. Dean admits to knowing about Berry鈥檚 background, but says he continued to work with him on the basis that he was a 鈥減ersonal nominee鈥� to Aviss. He also admits to sitting on an interview panel with Berry when appointing a chief executive for Mea. At the end of that selection process, a man called Robert Judson was selected for the job. Judson was chosen to install a group structure for Mea and prepare it for flotation. He was fired a week later, after Dean鈥檚 due diligence checks found that a Mea listing 鈥渄id not even get past first base鈥� and pulled out of the deal. However the sale of Bickerton Construction, Driver Construction and Gryphon Estates would still go ahead: Aviss was legally committed to that. Artisan announced to the stock exchange in June 2001 that it was selling Bickerton, Driver and Gryphon for 拢2.8m. The disposal was officially on the record. So Aviss set up a holding company, Infiniteland, to take on the companies, and reportedly mortgaged his house to complete the acquisition. Meanwhile, the firms that joined Mea were having their own difficulties. Ian Rennison, the former joint managing director of Rotrax, feels disgruntled about what happened to his firm. He says he wasn鈥檛 able to operate as managing director and complains that Aviss installed his own people as directors, and thereby controlled the board. Rennison feels so strongly about this that he has documented much of the activities of Rotrax, along with minutes of board meetings, and sent them to the DTI. An investigation is now under way, and the main focus of it is the role of Berry and his relationship with Mea. There is a similar story at electrical contractor CJ Bartley, another firm that succumbed to the attraction of floating on the stock exchange. CJ Bartley was one of the most respected and longest standing members of the Electrical Contractors Association. Simon Bartley, its managing director, was the fourth generation of Bartleys to have run the firm. In a similar manner to Rotrax, he found he lost control of the board and his position became untenable. He resigned as managing director in July 2001. In the end, CJ Bartley, Rotrax and Mea all went bust in a similar fashion to Bickerton. The collapse of Mea is being investigated by the Serious Fraud Office and Cleveland police.