Revealed: the 38 firms that went into administration in March

Thirty-eight construction companies fell into administration in March.

Not only was the total eight higher than February’s tally and 23 more than January, but it also marked an all-time high since Construction News began publishing monthly administrations data from Creditsafe in January 2020.

The previous record was set in February 2020 with 36 administrations.

The first-quarter (Q1) total of 83 insolvencies was almost another record, beaten only by the 90 business collapses recorded in Q1 2020.

“A lot of construction is typically low-margin – and, really, that means there’s not an awful lot of ability [for companies to] take knocks,” said Allan Kelly, a Newcastle-based partner in the restructuring team at FRP Advisory. “There’s not much wiggle room, and if there is a problem like inflation or a bad contract, it can completely derail a business.”

Among the most notable casualties in March was Northern Irish M&E contractor William Coates Ltd, which had been in business since 1964. Scott Murray and Ian Davison of Keenan Corporate Finance were appointed as joint administrators of the company on 2 March.

William Coates specialised in commercial, industrial and educational projects in Northern Ireland and the UK mainland. It was the M&E subcontractor for Gilbert-Ash on significant completed projects such as the £60m extension of the National Portrait Gallery in London and a business school (pictured) at the University of Brighton in Sussex.

In its most recent set of annual accounts, made up to 31 March 2021, the County Antrim-based firm posted full-year turnover of £13m – down by 25 per cent on the previous year – although it still made a modest profit of £38,321 against a loss of £2.4m in 2020.

Six other companies that collapsed in March were large enough to file detailed accounts with Companies House. CN previously reported on the demise of cladding firm Jessella and Jarvis Contracting (both based in Hertfordshire), as well as the failure of M&E specialist Norstead (sister firm of Newcastle-based Metnor, which itself went under in February).

Yorkshire blues

The March list also includes Torpoint Ltd, which began trading in 1993 and boasted a portfolio of completed residential and educational projects in northern England, especially Yorkshire.

In its most recent set of audited accounts for the year ending 28 February 2022, the company recorded net assets of almost £4.6m, while turnover surged by 22.5 per cent to £24.2m.

However, six months later, Torpoint noted “cashflow pressures” arising from a combination of payment delays, higher material prices “and a delay in the sale of properties” built by its development subsidiary Torpoint (Littlemoor) Ltd, which remains in business.

Company directors attempted to stave off disaster by extending terms of credit with suppliers, chasing payment of overdue retentions and taking out an additional loan facility.

Eventually, however, Rushtons Insolvency was appointed as administrator for the Bradford-based contractor.

Castlehouse Construction Ltd was another Yorkshire-based contractor to fail in March. The company had a track record of industrial and commercial projects in northern England, including several supermarkets for Lidl.

Administrators from Minerva have been appointed.

Castlehouse recorded turnover of £23.6m for the year ending 31 March 2022, up from £21.09m the previous year, but higher “administrative expenses” pushed profitability into the red with a net loss of £132,452.

Interpath was appointed as administrative receiver last month for Rutherford Estates Ltd, a construction subsidiary of the collapsed cancer-treatment provider Rutherford Health Group.

In its most recent accounts for 2019/20, turnover at Rutherford Estates grew by £1m to reach £1.5m, although net liabilities totalled £33.6m.

Directors admitted that “there are material uncertainties of the going concern assumption of the [Rutherford Health] Group, which has in turn caused material uncertainty of its ability to provide continuing financial support” to Rutherford Estates.

Only three of the four planned Rutherford oncology centres were operational by the time Covid hit the UK in March 2020, and disruption triggered by the pandemic caused the entire group to be wound up in June 2022.

CN reported in early April that Channel Islands-based contractor Garenne Construction Group Ltd was placed into administration after the liquidation of its subsidiary, Camerons, while County Durham-based steel supplier Intelligent Steel Solutions is set to be liquidated by mid-April.

So will the situation across the industry deteriorate further? Brian Burke, a restructuring specialist and managing director of independent advisory firm Quantuma, said that some firms could “reposition their cost base” by picking up contracts and finishing off work left by collapsed companies.

However, the cost of materials and labour each remain too high, in Burke’s view, and chancellor of the exchequer Jeremy Hunt did not address these industry-specific issues in last month’s Spring Budget announcement.

“The chancellor is clearly trying to bring inflation under control in general,” Burke said. “And, obviously, reduced inflationary pressures will be helpful to everybody. But in terms of specific measures that benefit the construction sector, I’m not aware of any in the Budget.”