Newly released Creditsafe data shows that construction administrations almost doubled year-on-year in October, with 37 failures compared with 19 the year before.
And the year-to-date total of 312 marks a 58 per cent increase compared with the first 10 months of 2022.
Eleven firms were large enough to file turnover figures with Companies House, while 10 employed two or fewer staff.
A big factor behind the October total was the demise of AIM-listed Inland Homes plc and nine associated companies. The housebuilder called in administrators from FRP Advisory, as uncertainty related to regulatory compliance meant it could not publish audited accounts for the past two financial years.
Work subsequently stopped on the £90m Patchworks high-rise scheme in Walthamstow.
Inland Homes’ most recent accounts, covering the year ending 30 September 2021, showed turnover of £181.7m with pre-tax profit of £13.2m delivering a margin of 7.3 per cent. The firm employed a monthly average of 143 staff in the year.
Its subsidiary Inland Ltd is also included in the October list. In its most recent accounts to 30 September 2021, turnover more than doubled to £83.3m, generating pre-tax profit of £15.7m.
Inland Partnerships Ltd (another subsidiary) posted turnover of £68.1m for the year ending 30 September 2021 versus £54m the previous year. The company was able to trim its pre-tax loss slightly from £1.5m to £1.3m.
FRP Advisory is handling the affairs of these and other Inland majority-owned firms. These include: Appletree Farm Cressing; Aston Clinton Developments; Brook Street Properties; Bucks Developments; Inland (STB); and Thames Homes. Inland also held a minority stake in Cheshunt Lakeside Developments.
October was also notable for the collapse of major mechanical and electrical (M&E) specialist Michael J Lonsdale. Administrators from Begbies Traynor are trying to sell off the company’s assets in a bid to recoup money for creditors.
Wellingborough-based subsidiary MJL Midlands (formerly E7 Building Services) also went under, little more than a year after its acquisition.
Ongoing projects for Michael J Lonsdale included the University College London Queen Square Institute of Neurology, which was due to be completed in July 2024.
The firm turned over £191m in the 12 months to 30 September 2022, making a £2.5m profit – down slightly from £2.7m a year previously.
Marc Hanson, a partner in law firm Mishcon de Reya’s construction group, warned: “In the short term, MJL’s [Michael J Lonsdale’s] insolvency will likely drive inflation for M&E work and will drive increasingly risk-averse behaviour from main contractors.”
Staines-based Richardson Roofing called in administrators from Begbies Traynor on 23 October. The envelope contractor had a broad portfolio of completed projects, including internal cladding for West Ealing Station and roofing for Kier Construction at the Grade II-listed Morley House (pictured) in London’s Regent Street.
Other major clients included Bowmer & Kirkland, ISG, Osborne and Willmott Dixon.
In its most recent accounts for the year ending 31 August 2021, Richardson Roofing posted turnover of £8.2m, up by 19 per cent on the previous year’s £6.9m. It fell into the red, however, as a pre-tax profit of £202,555 turned into a loss of £135,822. Cash at hand eroded from £2.9m to £1.2m but the firm paid out an ordinary dividend of £2.3m during the year.
One company was bought out of administration in October. Durham-based Floors to Walls collapsed amid “trading challenges in the 24 months following the outbreak of the Covid-19 pandemic and the closure of non-essential businesses”, according to administrators from FRP.
The residential cladding firm was sold to F2W Ltd for £40,000. Floors to Walls posted turnover of £1.9m in its most recent accounts to 31 May 2022.
Much darkness, little light
Almost 6,000 construction businesses are on the brink of bankruptcy, according to the latest quarterly Red Flag Alert report from Begbies Traynor. This marks a 46 per cent increase compared with the report for the second quarter of 2023.
Wayne Beck, partner on the finance and restructuring team at law firm Faegre Drinker, said this is “stark proof of the effect that the current economic climate is having on UK businesses”.
He added: “Now more than ever, companies should consider restructuring options to free up cashflow and ensure the best chances of weathering a turbulent economic climate.”
Administrations are yet to reach their peak in construction and other industries, according to Sarah Rayment, managing director and co-head of Kroll’s global restructuring practice.
“The cost of borrowing and the lack of access to working capital coupled with difficulties in passing on increased supplier and material costs will undoubtedly continue to leave companies incredibly vulnerable,” she added.
The Bank of England announced on 2 November that it was retaining its 5.25 per cent base interest rate, but it remains high by recent historical standards.
“High interest rates and the lack of credit are having a significant detrimental impact on contractor cashflows,” said Mishcon’s Hanson.
This was echoed in a 31 October joint statement from Builders Merchants Federation chief executive John Newcomb and Construction Products Association chief executive Peter Caplehorn. They described growing problems of cashflow and liquidity, adding: “Everyone in the industry, from clients through contractors and the materials supply chain, has a role in addressing this.
“For example, hardening payment behaviours between tier one, two, three and four contractors are only adding to market pressures, especially on smaller firms.”
|Company name||Location||Date of administration||Documents filed||Description of company activities|
|ALFA ESTATES (UK) LTD||London||31 Oct||Administrative receiver appointed||Development of building projects|
|APPLETREE FARM CRESSING LTD||Buckinghamshire||12 Oct||Administration order||Development of building projects|
|ASTON CLINTON DEVELOPMENTS LTD||Buckinghamshire||12 Oct||Administration order||Development of building projects|
|B & N DEVELOPMENTS LTD||London||17 Oct||Administrative receiver appointed||Development of building projects|
|BONVILSTON VALE LTD||London||13 Oct||Administration order||Development of building projects|
|BROOK STREET PROPERTIES LTD||Buckinghamshire||12 Oct||Administration order||Development of building projects|
|BUCKS DEVELOPMENTS LTD||Buckinghamshire||12 Oct||Administration order||Development of building projects|
|CAUSEWAYHEAD DEVELOPMENT LTD||West Yorkshire||18 Oct||Administrative receiver appointed||Development of building projects|
|CHESHUNT LAKESIDE DEVELOPMENTS LTD||Buckinghamshire||6 Oct||Administration order||Development of building projects|
|COUNTRYWAY HOMES LTD||Lancashire||11 Oct||Administrative receiver appointed||Development of building projects|
|DEVCOR (PLYMOUTH) LTD||Plymouth||17 Oct||Administrative receiver appointed||Development of building projects|
|FLOORS TO WALLS LTD||Durham||11 Oct||Administration order||Floor and wall covering|
|HAMON UK LIMITED||Hull||06 Oct||Administration order||Other specialised construction activities n.e.c.|
|HINCROFT LIMITED||London||24 Oct||Administration order||Development of building projects|
|INLAND (STB) LTD||Buckinghamshire||12 Oct||Administration order||Development of building projects|
|INLAND HOMES PLC||Buckinghamshire||12 Oct||Administration order||Development of building projects|
|INLAND LTD||Buckinghamshire||12 Oct||Administration order||Development of building projects|
|INLAND PARTNERSHIPS LTD||Buckinghamshire||12 Oct||Administration order||Construction of domestic buildings|
|JAMES KILLELEA & COMPANY LTD||Lancashire||18 Oct||Administration order||Other specialised construction activities n.e.c.|
|JOURNEY BUILDING CONTRACTORS LTD||Southampton||06 Oct||Administrative receiver appointed||Other building completion and finishing|
|LOGIE GLAZING AND BUILDING SERVICES LTD||Dundee||03-Oct||In administration||Development of building projects|
|M IGOE LTD||Cheshire||30-Oct||Administration order||Construction of commercial buildings|
|MB MASONRY LTD||Wigan||31-Oct||Administration order||Other specialised construction activities n.e.c.|
|MICHAEL J LONSDALE LTD||Berkshire||06-Oct||Administration order||Plumbing, heat and air-conditioning installation|
|MJL MIDLANDS LTD||Northamptonshire||06-Oct||Administration order||Electrical installation|
|P N T CONTRACTORS LTD||Hertfordshire||16-Oct||Administration order||Construction of commercial buildings|
|PURE PROJECT 1 LTD||Preston||12-Oct||Administrative receiver appointed||Development of building projects|
|REAL (EALING) LTD||West Sussex||25-Oct||Administrative receiver appointed||Development of building projects|
|RICHARDSON ROOFING (INDUSTRIAL) LTD||Middlesex||23-Oct||Administration order||Roofing activities|
|RINGWAY HOUSE DEVELOPMENTS LTD||West Midlands||27-Oct||Administrative receiver appointed||Development of building projects|
|SHERWOOD OAK HOMES LTD||Essex||10-Oct||Administration order||Development of building projects|
|THAMES HOMES LTD||Buckinghamshire||12-Oct||Administration order||Development of building projects|
|THE BROADWAY (EALING) LTD||Essex||13-Oct||Administrative receiver appointed||Development of building projects|
|TIME GB GROUP LTD||Hampshire||13-Oct||Administration order||Development of building projects|
|TROIKA CONSTRUCT LTD||Cardiff||04-Oct||Administration order||Development of building projects|
|WOOD FARM DEVELOPMENTS LTD||Ipswich||18-Oct||Administrative receiver appointed||Development of building projects|
|XYZ RAIL LTD||Cumbria||06-Oct||Administration order||Construction of commercial buildings|