Construction

Caldwell Construction Goes Into Administration

in A guide for redundant employees in administration or insolvency situations Construction

Groundworks and civil engineering contractor Caldwell Construction has entered administration following the filing of a notice of intention to appoint administrators earlier this week. PKF Littlejohn Advisory has now been appointed as administrator to the business. Caldwell Construction employs more than 400 people across operations in Stoke-on-Trent and Warrington and reported revenue of approximately £58m for the year to March 2025. The company’s most recent accounts, filed at Companies House in March, showed a loss of around £170,000 for the 2024/25 financial year, compared with a profit of £2.9m in the previous year. Despite the deterioration in profitability, directors stated in the accounts that the business was “performing well”, while noting margin pressure arising from increased material and labour costs, the completion of fixed-price legacy contracts, and a slowdown in the housing market. However, Paul Smith, partner at PKF Littlejohn Advisory UK LLP, said this week that wider industry pressures had significantly affected the business in recent weeks. He said “challenging trading conditions” had placed “significant strain on cashflow and operations at Caldwell”. Smith added:“The PKF Littlejohn Advisory team in Manchester and Leeds had worked closely with Caldwell’s management over the past few months to explore all available options and potential solutions for the business. “Unfortunately, despite extensive efforts, it was not possible to secure a way forward that would allow the company to continue trading outside of an insolvency process.”Founded in 2007, the company specialises in foundations, sewers, storm water attenuation systems, hard and soft landscaping, and the construction of carriageways and footpaths. Joint Administrator Oliver Collinge said:“The directors at Caldwell have taken the difficult decision to place the company into administration. Our immediate focus is now on supporting employees and stakeholders while we assess the position of the business and its assets.”

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Caldwell Construction Goes Into Administration
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Northumberland Firm Merit Goes Into Administration

in A guide for redundant employees in administration or insolvency situations Construction Notice of Intention to Appoint Administrators

Update 19th NovemberOffsite construction specialist Merit has ceased trading after entering administration, resulting in the loss of most of its 340 jobs.James Lumb and Will Wright of Interpath were appointed as joint administrators to Merit Health Limited and Merit Holdings Limited on 17th and 18th November respectively.​ The Northumberland Gazette has reported that A Cramlington-based construction company has taken action to “protect the position of the business” after a winding-up petition from HM Revenue and Customs (HMRC).Merit Group Services Limited has filed a Notice of Intention to Appoint Administrators, saying the petition caused project delays and “significant additional pressure” on cashflow, though it remains “confident that a solution to this difficult situation can be found.”The company heads a group of 16, including Merit Holdings, which is working with Northumbria Healthcare NHS Foundation Trust on the £35m Berwick Community Hospital and a medicines manufacturing unit at Seaton Delaval. Some of the hospital units have been built at Merit’s Cramlington site and transported to Berwick for installation.A Merit spokesperson said: “The recent filing of a winding up petition against Merit Group Services resulted in certain customer projects experiencing delays, which in turn has placed significant additional pressure on the group’s cashflow.“We have therefore taken the decision to file a Notice of Intention to Appoint Administrators in order to protect the position of the business while we explore options. We remain confident that a solution to this difficult situation can be found.”HMRC has not disclosed its reasons for the petition, saying such action is only taken “once we’ve exhausted all other options.”A trust spokesperson said: “Northumbria Healthcare has been made aware that Merit has filed a notice of intention to appoint an administrator. This is a very unfortunate situation and we appreciate that this will be a very difficult time for all involved.“The trust is continuing to work in partnership with the organisation and its advisers, and has adhered to the contractual agreements in place.“We have robust plans in place to ensure construction work continues to progress both the Berwick Community Hospital and Medicines Manufacturing Centre at Seaton Delaval.“We remain focused on delivering both projects as planned and are in on-going dialogue with all relevant parties to ensure continuity and minimise any potential disruption.”Construction businesses have the highest insolvency rates in part due to the "lumpy" nature of their income, complex contracts and unforseen construction problems.See how RMT KSA has saved construction companies using our innovative turnaround techniques.  We also have an office in Berwick!

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Northumberland Firm Merit Goes Into Administration

Could Thames Water Go Into Administration?

in A guide for redundant employees in administration or insolvency situations Construction News

Sky news has said that FTI Consulting have been lined up by the government as special administrators should the troubled utility firm not secure the funding it needs. Any appointment would need to be approved by the court thoughPeople are understandably worried that Thames Water might go into administration.  So what does this mean?  First of all the process that it would find itself subject to be something called Special Administration. What is Special Administration? ​​ Similar to ordinary administration, special administration means giving control of the company to administrators who will take steps to turn a company’s situation around if possible – or to wind it down in the most efficient manner.However in a special administration, client assets must be recovered as soon as possible.  Also the running of the company must be done in a way that does not impact the users of the services too much.  This is due to the strategic importance of the company.  As such large banks (Lehman Brothers) energy companies, hospitals, or other national utilities tend to go into a special administration. Special administration is actually run by a court process a bit like Chapter 11 in the USA.  This means the administration can take longer. Why is Thames Water in the news now? Basically there was a deal for KKR (A private equity firm in the US) to inject much needed cash into the company.  However it pulled out today putting the company's future in doubt.​Thames Water chairman Sir Adrian Montague said that while KKR's withdrawal was "disappointing, we continue to believe that a sustainable recapitalisation of the company is in the best interests of all stakeholders and continue to work with our creditors and stakeholders to achieve that goal"."The company will therefore progress discussions on the senior creditors' plan with Ofwat and other stakeholders."Thames Water has a £16bn debt pile.  In any administration the idea is that the business is sold to a buyer.  Obviously in the case of Thames Water the only realistic buyer, if no one is prepared to invest in it, is the Government - meaning nationalisation.In any special administration there will be no interruption to any supplies but there could be job losses.  If you are an employee and worried about what might happen then look at our guide for redundant employees 

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Could Thames Water Go Into Administration?

ISG Goes Into Administration and is the biggest Collapse since Carillion in 2018

in A guide for redundant employees in administration or insolvency situations Construction

Update 28th OctoberFirst large casualty of the ISG administration can be seen here https://www.punchline-gloucester.com/articles/aanews/cheltenham-lighting-firm-goes-into-administration​ Update 22nd OctoberAdministrators at ISG have discovered that the company owes some £89m to its trade creditors, with 13 subcontractors owed more than £1m each.​“Keith Steven of KSA Group commented, with over £180m of debt owed to trade suppliers, contractors and subcontractors, this will have hit the construction sector hard. Many creditors will experience trading losses as a result. And with recoveries from the administrators and liquidators work expected to be close to zero or zero, this will have a huge impact on creditors.”.​​​​​​ISG, the construction company and UK Government contractor, has entered administration, making 2,200 workers redundant with immediate effect.Based on turnover, ISG was the sixth largest construction company in the UK, with revenues of around £2.2bn. Despite this, the firm has faced financial strain for some months and attempts to secure a rescue deal failed.ISG Chief Executive, Zoe Price, explained the situation had arisen due to ''legacy issues'' relating to ''large loss-making contracts'' secured between 2018 and 2020.A notable project ISG completed was the Velodrome for the 2012 Olympics. Most recently, the contractor was working on 69 Government projects - 22 of these for the Ministry of Justice.A spokesperson of Ministry of Justice said that contingency plans were in place to mitigate the impact of ISGs collapse. Administrators will be worked with, to ''find alternative ways to deliver these projects where necessary''.As of yet, no administrators have been confirmed as appointed, but rumours are circulating that it will be Ernst & Young.The last time there was a high-profile collapse in the construction sector was in 2018 with Carillion's administration. The aftermath of that collapse was lengthy delays in projects and in addition, increased costs. Is the same going to happen for ISGs paused projects?The collapse of yet another big construction company highlights cracks in the UKs construction industry and certainly raises some questions.Suzannah Nichol, CEO of Build UK (the sector's trade body) remarked, ''While there have been changes since Carillion six years ago, there clearly has not been enough change.''If you are an employee who has just been made redundant, please take a read of our helpful guide here.

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ISG Goes Into Administration and is the biggest Collapse since Carillion in 2018
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Hadden Construction Goes Into Administration

in A guide for redundant employees in administration or insolvency situations Construction What Does Going Into Administration Mean?

Hadden Construction, the Perthshire housebuilder established in 1992, has gone into administration with the loss of 66 Jobs.Work on active sites including supported living apartment developments and affordable homes will stop depending on an evaluation of ongoing projects.This week joint administrators Ben Cairns and Jonny Marston from Alvarez & Marsal were appointed to "wind down" company operations.The failure of the company was blamed on rising materials costs and an increase in labour rates.Mr. Cairns said: "Like other contractors, Hadden Construction has been battling a number of headwinds in recent years, including inflated materials prices, rising labour costs and supply chain interruptions.“As administrators, we will seek an orderly wind down of the operations and will welcome any investor interest in the company’s assets.”Mr Cairns added: “We understand that today’s news is unsettling for the company’s employees and will be doing all we can to support them over the weeks ahead.”With a turnover of £30.2 million, the most recent figures for the company for the year ended March 31 2023 show a pre-tax profit of £260,503.Hadden was appointed by the Scottish Procurement Alliance to its £100 million Refurbishment and Modernisation (RM3) Framework in March of this year. Apart from several other public sector frameworks including Scotland Excel's New Build Residential Framework, Wheatley Group, Link Group, Hub East Central, Hub South East and The City of Edinburgh Council, Hadden was already appointed to SPA's Public Buildings and Infrastructure (PB3) Framework and New Build Housing Construction (H2).In addition, it was preparing to replace 20 chalets on a permanent Gipsy Traveller site near Perth, the company signed a £1.9m design and construct contract in April to deliver 10 reasonably priced homes for rent in Newtyle for Abertay Housing Association.Elsewhere, Hadden had worked on a £6.25 million renovation at the Muirhead House student residence at the University of Stirling.The construction industry has the highest insolvency rate when compared to other industries. This is due to a number of factors.Below are some of the common problems we’ve seen happen in the industry: Contract arguments and QS problems. Bad debts. Delays in repayments from HMRC, regarding CIS deductions (which are connected to PAYE scheme). HMRC can be slow in making CIS refunds, leading to issues with cash flow. Time to pay deals with HMRC for PAYE and VAT (where applicable) being too expensive for your cashflow. Losses made on large contracts, where large clients or main contractors slow down payments and sometimes go into administration. Hitting YOUR cashflow. So called “subby bashing”. Issues with sub-contractor non performance or slow completions. Difficult customers, be they private individuals, clients or contractors – who add extra work on and won’t pay extra! Lengthy contracts with material prices agreed at beginning. I.e. quotes do not keep up with rising costs. Especially tough after huge price rises in recent years. Less focus on financial accounts, financial management due to directors and management being onsite. Hard to win new contracts if cash flow is tight, perhaps due to low credit rating. Retention sums not released at agreed times. Suppliers taking legal actions such as County Court Judgments, or even issuing winding up petitions.

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Hadden Construction Goes Into Administration
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Readie Construction Goes Into Administration

in A guide for redundant employees in administration or insolvency situations Construction What Does Going Into Administration Mean?

Readie Construction which had a turnover of £421m has gone into administration with Begbies Traynor.The administrators put out the following statement “Unfortunately, the Company will cease to trade immediately and the Joint Administrators will begin to wind down its operations with immediate effect. Creditors of the Company are asked to contact Begbies Traynor on readie@btguk.com to register a claim.  “Having just been appointed, we are assessing the situation and further updates will be made as and when it is appropriate.” We believe Readie is too risky to continue trading in administration and therefore the newly appointed administrators have closed the business down.It is highly likely that all employees will leave the business immediately. Also we should add that at least £40m of suppliers and subcontractors bills will go unpaid, hammering many smaller companies in the South East.If you are impacted by this and need a plan to recover, speak to the rescue experts at KSA Group.  Call on the number on the site or email us help@ksagroup.co.uk

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Readie Construction Goes Into Administration

More than 100 building firms predicted to go bust each week in 2023, according to new research

in Construction News

New research from Red Flag Alert suggests that the construction sector is going to face some trouble this year, with financial experts predicting more than 100 building firms to go bust every week.This is no shock, with construction having faced difficulty before, and as The Insolvency Service reported before Christmas, businesses within the construction sector are going bust at the fastest rate in a decade.According to Red Flag Alert’s research, there is around £300m in bad debt within the UK construction industry, as we enter 2023. This could rise to £1bn by the start of 2024. Ultimately, firms who usually keep their heads above water though the current recession, are being dragged under by the bad debt of those whom fail.Why are there so many unpaid bills? Well, with much pressure from staff and supply chain issues for the sector, what do you expect? Mixed with Covid and all the implications left, along with inflation and rising interest rates. Things do not look good.Chief Economist of Red Flag Alert, Dr Nicola Headlam remarked:‘’ This is not good news for the industry and UK as a whole. This will lead to a much smaller pool of construction companies available for contracts and for suppliers to do business with. The post-recession economic bounce back will be hampered by a lack of building companies available for projects in the next growth stage, and a supply chain that will be unable to respond to growth signals This will choke off growth in the next economic cycle.”Its looking to be a pretty perfect storm for insolvencies this year in the construction industry. And what a time! With this recession, we need construction to lead the way forward, particularly with the housing crisis we are in. Will the construction industry continue to decline or is there at least some hope for a healthier future?If you are a worried director of a construction firm or a business related, do get in touch. Let our expert advisors talk through and consider the best way forward.

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More than 100 building firms predicted to go bust each week in 2023, according to new research

Construction Finance

in Construction

Having difficulty getting Construction Loans or Finance? Every business is different, however there are particular issues that construction businesses face which are unique to the sector.Often with low margins and tough trading conditions, cash flow can be a problem. Below is a list of problems we’ve seen happen in the industry:Retention sums not released at agreed times Delays in repayments from HMRC, regarding CIS deductions (which are connected to PAYE scheme). HMRC can be slow in making CIS refunds, leading to issues with cash flow. Loss of large contracts Issues with sub-contractors Difficult customers Lengthy contracts with prices agreed at beginning. I.e. quotes do not keep up with rising costs. Less focus on financial accounts due to management being onsite Hard to find new contracts if cash flow is tight, perhaps due to low credit ratingIt might be that an additional loan is not what is required....  As turnaround practitioners, our specialists can help tackle these issues with you to get your construction business back on track. We can go through all the available options, like expert assessment of the issues your company faces, improved financial reporting,  Time to Pay deals, CVAs and pre-pack administrations.  We can also find finance for construction companies in distress.We also have industry specific turnaround experts who can act as non executive directors, chairman or turnaround managers.  We have turned around construction companies from £500k to £25m sales.Call us on 0800 9700539 for free expert advice and a talk through your options. We can visit you onsite to discuss your specific situation.

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Construction Finance

CVA Case Study – Scottish Recruitment Company

in Construction What is a CVA (Company Voluntary Arrangement)?

One of the directors of a Scottish registered company, trading since 1994 and now trading from premises in Edinburgh, contacted and then appointed KSA in June 2009 to assist with the preparation of a Company Voluntary Arrangement (CVA) to the company’s creditors.The company provides temporary and permanent personnel placements across a number of sectors including industrial, construction & property, manufacturing, technology, scientific and information technology to name but a few.The company mainly operates in the central belt of Scotland but has also provided personnel around Europe, Iraq, and other areas of the world.Over time the majority of the company’s business related to the construction and property sectors, making up approximately 40/50% of the company’s turnover.The company had invested quite heavily at the end of 2007 and beginning of 2008, taking on larger offices and recruiting 17/19 new sales team members. Almost half of the new staff were recruited to focus on expanding markets like house building and consultancy recruitment.During 2008 the company started to feel the early effects of the current economic downturn but similar to other companies the company was unaware of the drastic effect it would have on new business, existing business and also debt recovery.At the end of 2008 the company took steps to reduce costs by making a number of staff redundant and vacating its premises in Glasgow so as to only trade from its premises in Edinburgh. Despite these changes the company was struggling to deal with historical debt of approximately £1.35m owed to unsecured creditors, including approximately £1.1m owed to HMRC.

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CVA Case Study – Scottish Recruitment Company