Administrators for collapsed contractor NMCN have recouped just £4.5m from the sale of properties formerly owned by the firm, meaning most creditors owed money by the company will miss out.
Administrators from Grant Thornton were appointed to NMCN in October last year after the contractor, previously called North Midland Construction, failed to secure refinancing.
The administrators subsequently revealed in May that more than 3,000 creditors were owed over £115m by the former contractor, which had a turnover of £400m. The figure was nearly double the initial £60.5m total that was thought to be owed to an estimated 2,400 creditors at the time of the business’ collapse.
A new update from administrators this week says that they expect to recoup about £7.4m from the “realisable value” of its freehold properties – more than was estimated earlier in the process.
The latest administrators’ report says that three freehold or long-leasehold properties were sold for £3.58m, bringing the total funds from property sales to £4.5m. A further £650,000 was secured from other aspects of the business.
One office at Kingsland Grange in Warrington, Greater Manchester, was sold for £1.95m; a further property at Normanton Industrial Estate in West Yorkshire was disposed of for £840,000; and a third property at Sherwood Business Park in Nottingham was sold for £795,000.
Administrators also reported that two further properties are expected to be sold by the end of November. One property, in Huthwaite, Nottinghamshire, and another at the Millennium Business Park, Warrington, are expected to complete “in a couple of weeks”. The sale of those properties was held up by “instability in the property market” and the withdrawal of offers.
Grant Thornton applied to extend the administration of NMCN for a further 12 months in September, with the High Court granting it until 5 October 2023. However, the new report says the intention is now to move towards the dissolution of the company.
The report states that administrators have made payments to secured creditors including Svella – the investor that was leading a £24m refinancing of the contractor – and now expects to be able to pay Svella “in full”. The report notes that Svella was owed £12.7m (before accruing interest and charges), while another financer and secured creditor, Reflex Bridging, was owed £5.4m.
The report by joint administrator Nigel Morrison of Grant Thornton says, however, that preferential creditors – which includes ex-employees – and an estimated 3,000 unsecured creditors will lose out. It states: “We do not currently anticipate that there will be sufficient funds to pay the ordinary preferential creditors of the companies in full or the secondary preferential creditors.
“It is unlikely that there will be sufficient funds to make a distribution to unsecured creditors of the companies (even by virtue of the prescribed part).”
The report states that ex-employee claims currently total £380,000.
NMCN’s collapse was the biggest corporate failure in the construction sector since Carillion in 2018.
Most of the jobs NMCN was working on at the time of its collapse were secured, while its telecoms business and most of its plant and machinery were sold to Svella. Galliford Try bought the firm’s water division and Keltbray Highways acquired parts of its infrastructure operations. But administrators failed to find a buyer for NMCN’s building business, leading to the loss of 80 jobs.