300 jobs at risk after Owen Pugh Group falls into administration

13 October 2017

The north-eastern construction firm, the Owen Pugh Group, has called in administrators after severe cashflow issues.

Who are the Owen Pugh Group?

The construction firm, operating for 71 years, originally specialised in construction plant hire. However, it recently diversified into earthmoving contracting and demolition.

Services in its current remit include:

  • Civil engineering
  • Drainage
  • Demolition
  • Haulage

The headquarters of the Owen Pugh Group are situated in Dudley, Newcastle-upon-Tyne, but the operation spans across five sites and employs an estimated staff of at least 300.

In 2005, the group was acquired from the Pugh family in a management buyout according to the firm’s website. The firm is now a contractor on the multi-million-pound project to build a triple-decker roundabout at the Siverlink junction. However, it is understood that the move to administration will not affect this venture, as a contingency plan is in place.

Why has the firm moved into administration?

On the morning of 9 October 2017, Christopher Petts and David Dunckley of Grant Thornton UK LLP, were appointed joint administrators for Owen Pugh.

They claim the company made this move into administration due to cashflow problems, resulting from loss-making projects. One example of this was the write-off of almost £200,000, when a construction firm in Southdale went bust.

Though previous years had seen steady growth, the accounts from the last full year (to March 2016) saw Owen Pugh Holdings record a pre-tax loss of £364,932 on a revenue of £36.7m.

Petts, one of the administrators, said:

The group has experienced significant cashflow pressure in 2017 as it embarked on a number of large and high-profile projects which have, ultimately, proved to be commercially unsuccessful.

Despite having sourced additional external investment during July 2017, cash pressure intensified culminating in parts of the group being presented with winding up petitions in recent weeks, which they have been unable to satisfy.

Winding up petitions are the most serious form of legal action. Pre-pack administration is a relatively common way to try and rectify the business’ position.

Several prospective purchasers have already expressed an interest in buying parts of the business and some of the group’s assets. The administrators are said to be “urgently exploring” these options, but are unable to offer guarantees to employees of the group.

This means that approximately 300 employees are left unsure of their state of employment. However, North Tyneside Council have pledged to help those facing this uncertainty.

A spokesman said: “It is disappointing to hear reports that a major business based in the borough has gone into administration. Alongside our partners we as a council will try to help those workers affected find alternative employment.”

Categories: Administration, What is administration, Redundant Employee?