Espen Mattson and his father maxed out their loans in a desperate attempt to save the family business. It was all over on the tiny little Christmas Eve.
Esmabygg Anlegg AS has been going since 2012. On December 22, 2023, the company came to an end. Photo: Private Published: Copy link Copy link Share on Facebook Share on Facebook Share by email Share by email
Nine people are left without a job after Trøndelag District Court opened bankruptcy proceedings against the family business Esmabygg Anlegg AS on Wednesday.
“It’s very heavy that it had to end like this. Especially that it should happen in the middle of Christmas,” says CEO and Chairman Espen Mattson.
“I think of my colleagues who are now jobless. It was painful and difficult to announce that they would not receive their December salary in January,” he says.
The construction and engineering industry is among the industries hardest hit by the economic turmoil with interest rate hikes and significant price increases.
The bankruptcy adds to the grim bankruptcy statistics for the construction industry. So far in 2023, 1,128 construction companies have gone bankrupt, according to Bizweb. The previous three years, the number of bankruptcies in the same industry has been between 795 and 839.
“Ended up with the short end of the stick”
The father of three from Trondheim established the company with his father Anders Mattson in 2012, after running his own carpentry business for four years. Father and son each owned half the shares.
The construction company took on assignments from businesses and private individuals, and developed its own housing projects.
Espen Mattson says the company ended up in a liquidity crisis as a result of non-payments totaling 4.5 million kroner from two clients.
“The downturn began with a difficult private customer. We completed the job, but ended up with the short end of the stick in the form of an unpaid claim of over two million kroner,” Mattson explains.
“In addition, we received a complaint of over two million kroner related to a building we had previously sold, for a mistake that was beyond our control,” he continues.
Couldn’t sell the house
At the same time as the disputes with the two customers dragged on, the financial problems escalated further. The company was unable to sell a duplex they had built in Trondheim.
“We obtained valuations from four real estate agents to ensure that the property was priced correctly, but still were nowhere near to selling at a reasonable price. Meanwhile, construction loan interest rates continued to rise and rise,” says Mattson.
In the end, the equity was completely eaten up. The company has informed Trøndelag District Court that it has debts of 23.5 million kroner and assets of about 16 million kroner.
“Bitter”
Mattson says he and his father have gone to great lengths in an attempt to save the family business.
“Both my father and I have maxed ourselves out personally, and taken out what we can in loans to provide equity and keep the company alive. In the end, it became too heavy,” he says.
Mattson explains that the company also appealed to private investors, but to no avail. When they were turned down by the bank on Thursday, December 21, after a final attempt, he saw no other way out than to close down the operation.
“I called for a board meeting the next day, where we decided to file for bankruptcy. We didn’t want to operate at the expense of creditors,” he says.
Mattson doesn’t hide the bitterness.
“For a long time, I thought we would weather the storm, either by getting fresh funds or finally getting some of the millions we were owed. Then we could have turned last year’s losses into a profit. Instead, we were eaten alive by debt,” he says.
Attorney Kai Stephansen has been appointed as the bankruptcy estate administrator. “The company has been struggling with liquidity problems for some time. My preliminary impression is that the CEO has tried to secure financing from both banks and private investors. When this was not successful, the board decided to file for bankruptcy, as they did not want to operate at the expense of creditors,” he says.
Stephansen, who has for years handled bankruptcy estates on behalf of Trøndelag District Court, says that in 2023 there have been noticeably more bankruptcies among the players in the construction and engineering industry than usual.
“It looks as if there are tough times in the industry. We have had several major bankruptcies among local contractors and other players in construction and engineering,” Stephansen says.
CEO Eirik Gjelsvik of the construction giant Backe recently told E24 that frequent interest rate hikes “are deadly for the industry” and stated that the company has already had to lay off 45 employees.
Since then, the policy rate has been raised by an additional 0.25 percentage points.
