Construction contractor owed creditors £11m when it collapsed

Lancashire-based contractor Construction Partnership UK owed close to £11 million to creditors when it collapsed in April, according to a new report from administrators Duff & Phelps. The company’s administration was blamed on the impact of coronavirus and “contractual issues” following the loss of several contracts.

This included The Rise, a £23.4 million mixed-use development in Liverpool, that led to £3 million in bad debt. The contract was due to be the firm’s biggest ever job but work stopped last year when developer Primesite Development ran into funding issues.

When work halted, Construction Partnership UK had completed work worth £7 million. At this point, Duff & Phelps says, “the company began to experience delays in payments and processing of certificates". Attempts to find a new partner to complete the contract in a joint venture failed as losses were too great.

Prior to its collapse, Construction Partnership UK had turnover of around £40 million.

According to Duff & Phelps, the firm was hit by a combination of late and missed payments, overrun on projects and increasing materials costs. These issues were exacerbated sites being forced to close due to COVID-19 lockdown. At the time of its collapse, Construction Partnership UK owed creditors £10.9 million, including debts of £9.2 million to trade creditors and £570,900 to HMRC.

All 94 staff were placed on furlough in March before being made redundant in May. Former employees have made preferential claims totalling £73,100 against the company, but Duff & Phelps say it is uncertain whether they will be paid.

The administrators said that some repayment to trade creditors was likely, but did not say how much of the £9.2 million would be paid. A £500,000 bridging loan secured in March from investment firm Anita Venetian, the firm’s only secured creditor, is likely to be repaid in full.

In this recent BSR Insight, we highlighted the difficulties afflicting companies who cannot pay their invoices and those unable to collect on payments they’re owed, specifically looking at how this is impacting the construction sector.


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