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Monday, 29 November 2010

Construction Companies have had a difficult November

November has been a very difficult month for construction companies. First of all Rok plc surprisingly went into administration and since then there has been a string of failures.

Last week, the Midlothian-based ERDC Group, went into administration. At its peak the company employed 0ver 200 people. The administrators have made 73 out of the 79 people redundant.

Also last week, two Hull based construction companies went into administration resulting in the loss of 90 jobs. Quibell & Son (Hull) Limited and Humber Joiners Limited were both part of Quibell Construction Group. The Hull companies, provided construction services mainly to the public sector, and according to the administrators have been loss making for a number of years. Margins on work was getting very tight and the slightest delay in payment has been the the last straw.

Finally, Irwins, a Leeds based construction business, went into administration with the loss of 56 jobs, leaving school, university and national trust sites with building work unfinished.

In a further blow to the construction industry, a major Austrian customer of Costain has gone into administration owing it £22m for the work done on the Belvedere energy-from-waste facility in London.
Other construction businesses to enter administration in November have been DB Russell Construction and Lowry Homes.
Apart from some knock-on effects from the failure of Rok plc it appears that many construction businesses are finishing off projects but have not won enough contracts going forward to keep them going.
There is another way for some of these companies. A company voluntary arrangement should be considered instead of administration if the business has a viable future and a proportion of their debts can be paid off over a 3-5 year period. A cashflow problem can be solved!

If you don't want to leave your construction business in the hands of the administrators then call us. A CVA can be a very effective rescue tool. If you have worries or doubts about the process read our mistruths page on CVAs

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