A further £9m impact on supply chain companies has been revealed in administrators’ reports into two companies that were affected by the demise of ISG.
ESS Modular, which was owned by Cathexis – the same US parent company as ISG – collapsed in September owing more than £7m, while Seventynine Lighting, which collapsed in October blaming ISG’s administration, owed subcontractors £1.8m.
A report from administrators from EY into ESS Modular said the failure of owner Cathexis to offload ISG meant it could not be given the funding it needed to continue operating.
ESS, which employed 101 people and was based in Hull and Warrington, had been loss-making since 2022 but had received more than £60m in historic funding from Cathexis, including £6.2m during 2024.
The £32m-turnover firm landed a place on a six-year framework for the Defence Infrastructure Organisation in August to build accommodation for the British military, but it still needed “substantial further funding to continue to trade and unwind the cash losses on the existing contracts”, EY said last Friday.
“While not fully quantified, provision of this level of funding was dependent on Cathexis achieving a solvent sale of part or all of the ISG Group,” the report added.
Cathexis had been trying to offload ISG, with more than six months of negotiations with Antipodean Holdings eventually breaking down in September. The failure to achieve a sale was blamed for ISG’s collapse.
EY also revealed it held advanced discussions with three potential buyers and received one bid for the ESS Modular business after the administration process began, but the bidder did not pursue the purchase before a deadline of 7 November.
It is estimated that ESS Modular owed subcontractor creditors £4.4m and purchase ledger creditors £2.7m.
The administrators said it was too early to tell how much non-preferential creditors will receive.
Gloucestershire-headquartered lighting subcontractor Seventynine Lighting, part of the 79 Group, was owed around £2m by ISG, according to insolvency professionals at Forvis Mazars.
A new report on its affairs said it had traded successfully since 2006, turning over £10.7m and making a pre-tax profit of £665,700 in the year to 31 May 2023.
It employed a monthly average of 34 staff.
But because it was owed the money by ISG and carried out most of its work on the contractor’s sites, the firm could not continue to operate, the administrators said on Tuesday (19 November).
It owed £2.9m to unsecured creditors, including £1.8m to subcontractors for work they carried out on ISG sites, Forvis Mazars added.
“It is expected that there will be a modest return to unsecured creditors,” their report noted, adding that it was too early to estimate how much this will amount to.
Other companies in the 79 Group – Seventynine Holdings, Seventynine Group and Seventynine Eco – are not in administration and continue to trade.
Subsidiaries of ISG owed more than £301m to its supply chain, with most not expected to be recouped, administrators’ reports have previously revealed.
ISG turned over £2.2bn and employed more than 3,000 people before its collapse. Last week Morris & Spottiswood bought its former ISG Cathedral business out of administration, saving 111 jobs.
