A south-east London construction firm owed £6.6m when it collapsed in March, its administrators have revealed.
ME Construction, which had 25 staff before going under, owes money to more 306 companies, with some suppliers owed more than £100,000. Administrator FRP Advisory said the company’s total deficit – the amount it owes minus the estimated value of its assets – is £5.4m.
The company’s creditors include HM Revenue & Customs (owed £1.05m) and Lloyds Bank (£1.3m), as well as trade creditors such as Morris Leslie Plant Hire (£96,000), mechanical & engineering contractors Relabond (£96,000), Travis Perkins (£184,000), Winters Electrical Services (£80,000) and Elmstead Mechanical Services (£144,000).
ME Construction was founded by two former Bovis Lend Lease staff and was part of Mecon Group, which is still trading. It turned over £23m before Covid-19 but saw its revenue decrease to £15.2m in 2020 and £17m in 2021 because of delays due to the pandemic, predominantly on projects for the NHS.
The company continued to make a small profit after Covid-19 but was felled by cashflow problems after its sister company MEC Design & Build acquired a subsidiary, Taylor French Developments Limited (TFDL), in April 2022 with problems in its ongoing contracts.
FRP Advisory said: “The contracts acquired from TFDL were found to have substantial liabilities attached to them and both MEC Design & Build and TFDL utilised [ME Construction’s] credit facility.
“The financial challenges impacted [ME Construction’s] own profitable contracts and with credit facilities exhausted, the business was unable to progress work on its own contract sites, reducing cashflow and further compounding issues.”
MEC Design & Build is still trading but TFDL entered liquidation in February.
In its last reported financial results, for the year ending 31 December 2020, Mecon Group made a £1.1m loss from a £30m turnover.