Lavelle's best efforts fail to save Erinaceous

This week, partners from KPMG were appointed as joint administrators at the property services company. Jim Tucker and Myles Halley will try and pull off a complicated process, which may see some parts of the company offloaded, while some are sold and others are ring-fenced.

On his appointment last year, analysts had suggested that the former FD of Alfred McAlpine might be living on borrowed time if nervy investors objected, but his survival prospects were given a major boost when its bankers agreed to stand by the company after a turbulent year which saw the company settle a £26m property over-valuation dispute.

Those same bankers have now opted to cut their losses and buy the well-performing Erinaceous Insurance Services arm as part of the administration.

KPMG said: ‘The strongly performing insurance subsidiary ­ Erinaceous Insurance Services ­ is ring-fenced from the rest of the group, and continues to operate as normal. The administrators have agreed to sell Erinaceous Insurance Services to a vehicle owned by Erinaceous’ banks.

Erinaceous’ Residential Management division and Property Maintenance division also remain outside of any insolvency process and continue to trade as normal, KPMG said.

On his appointment as FD last year, Lavelle was tasked with spearheading a strategic review of Erinaceous, which had been trying to recover from its damaging over-valuation issues and a boardroom clearout , which forced the departure of its chief executive Neil Bellis and FD Michael Pearson.

Lavelle had been a central figure in convincing lenders to keep bankrolling the company until their change of tack this week.

The extent of Erinaceous’ problems, coupled with the capital markets upheaval, scuppered any chance of refinancing the group’s borrowings, finding a buyer or raising equity, KPMG said.

Erinaceous employs close to 4,000 people in 200 different locations nationwide but has been weighed down with ‘unsustainable’ debts of more than £250m after rapid growth on the back of an aggressive acquisition strategy.

Now the firm has warned that the future for the company’s employees may be bleak.

Jim Tucker said: ‘Discussions are taking place with a number of parties interested in these businesses. The administrators hope to conclude these negotiations shortly but it is too early to tell how many employees will be affected.’