Revealed: the 23 firms that went into administration in December

Twenty-three construction administrations were recorded in December – more than one for every working day of the month.

Data compiled by Creditsafe showed that 19 firms entered the process in the weeks before Christmas, with another four following before the end of the year.

The total is down from November, when 34 companies in the sector collapsed into administration or administrative receivership, the highest monthly number since the start of the COVID-19 pandemic.

But December’s figure, in a short working month, remains cause for concern as it is higher than the number seen in each of August, September and October.

FRP Advisory restructuring partner Glyn Mummery said: “December is ordinarily relatively quiet for insolvencies. January is a long month and we expect to see an increase in activity. A lot of businesses are carrying debt following the recession, and servicing the debts is becoming harder.”

A “constant wave” of price pressures and economic blows has made staying afloat increasingly difficult, Mummery added.

“Challenges at the moment are numerous – interest rates, inflation, labour shortages and wage demands. All these are eroding profits.”

Firms suspected of being in trouble in this climate risk being sucked into a vicious cycle, he warned.

“If the industry rumour mill gets going then it can become a Catch-22 where clients withhold payment and it spirals. We see that more in construction than any other sector.”

No major contractor went under in the month, with most that collapsed being too small to publish full accounts. The largest was M&E specialist Working Environments with a £34m turnover.

The third largest, measured by turnover, was interiors firm Arthouse at £24m, which continues to trade under new ownership after being acquired shortly after EY took over its affairs. Wind power specialist Windhoist, whose revenue was £28m in its latest annual accounts, was the second largest.

Interpath Advisory director Neil Morley said many companies in distress tried to close their doors early in December and deal with their problems after the Christmas break.

He warned that mid-size contractors were facing pressures from both above and below at the start of this year.

“I am still seeing liquidations running at much higher numbers than administrations. These occur where there is not as substantial a business,” Morley said.

If the companies at the end of the supply chain are collapsing this can cause difficulties for the next tier up trying to complete projects. “It works its way up the chain to the main contractors in this way.”

Morley added: “All the market forces suggest an increase in insolvencies. Construction is insulated because work is committed for the next couple of years but clients are not committing to work in the future so the pipeline is drying up. This trickles down the supply chain.

“So there are dual pressures working up and down the chain. Regional players, perhaps up to £100m in revenue, get hit in the middle. They have often diversified and looked to work outside their usual area.”

Stephen Rawlinson, director at consultancy Applied Value, said the latest figures showed how much better big contractors had become at managing economic pressure.

“It is increasingly tough in the construction sector but the larger contractors are managing subbies a lot better than they were. I’m convinced that a couple of decades ago we’d be seeing much higher insolvency numbers with these economic conditions.”