Revealed: the 30 firms that went into administration in February

Construction insolvencies are once again on the rise, with 30 companies going into administration in February – double the total for the previous month.

“It’s worth noting that an uptick in insolvencies now is likely a result of the issues the sector – and wider economy – faced this time last year as inflation began to rise,” said Max Jones, a director in Lloyds Bank’s infrastructure and construction team.

“With jobs often taking months to bid on and weaker pipelines not immediately impacting a business’s financial performance, it’s not a major surprise to see the country’s economic worries from last year feeding through to 2023,” he added.

“The same applies to firms taking on contracts with tighter margins – it can take a while for these to mature and for the issues that operating on slim margins bring to come to the surface. Inflation won’t have helped in that regard and businesses will this year start feeling the pinch from jobs priced 12 months ago.”

There were 34 construction-business failures in November, although the monthly total fell to 23 in December and 15 in January.

Underlying factors

The underlying factors behind construction-business insolvencies remain largely unchanged, said Construction Products Association (CPA) head of construction research Rebecca Larkin.

“Firms are still experiencing the same issues… namely high rates of input cost inflation across materials, labour, and fuel and energy, particularly if they are operating under fixed-price contracts signed a while ago,” she said.

Also, the construction market is now entering a period of weaker demand with a lower volume of available work, with Larkin adding that even projects that are about to start or are in progress “are taking longer to get the green light or move on to the next phase as costs rise, creating a cashflow problem”.

She warned of a “knock-on effect through the supply chain” resulting from previous insolvencies, with rising bad debt worsening the financial position of firms still in operation and “a further round of cost increases related to the Bank of England’s rapid monetary tightening throughout 2022”.

Begbies Traynor regional managing partner Julie Palmer said that supply chain issues “have certainly eased” in general, although material prices remain high. “Where there are issues affecting contracts in terms of price or delivery, the larger contractors will still manage their own position by withholding payments, which can cause rapid challenges for those down the subcontract chain,” she added.

Most of the companies on the list, provided to Construction News by Creditsafe, were too small to be required to file detailed accounts with Companies House, but the highest-profile casualties in February were in the North East.

Newcastle-based Metnor, for example, went under in late February. It focused on projects in the leisure, student housing and healthcare sectors – one of its ongoing jobs was an 8,000 square metre training centre that was due to open later this year at Cramlington Hospital (pictured).

Administrator FRP stated that Metnor “suffered significant financial challenges” over recent months amid contract losses and “immense pressure on profit margins from rising input, labour and raw material prices and supply issues against fixed-price contracts”.

More bad news for Metnor followed in early March when CN reported that sister company Norstead entered administration.

The fall of Tolent Construction and its subsidiaries, however, has even greater implications for the construction supply chain in the North East.

Gateshead-based Tolent turned over £198m in its most recent set of annual accounts for the 2021 calendar year, and it ranked 67th in the CN100 list of major UK contractors.

Yet it still posted a £4m loss, and a series of financial difficulties, such as its loss-making £85.5m Milburngate hotel project in Durham, led the firm to call in administrator Interpath on 13 February.

Some of Tolent’s employees and projects have since been taken over by smaller contractors, such as Sunderland-based Brims Construction and regional social-housing specialist Re:Gen Group.

However, Tolent was so important to the local supply chain that its collapse has inevitably left subcontractors fearful for their own futures.

“Issues are moving up the supply chain as smaller firms collapse; insolvencies among main contractors have been on an upward trend over the past 18 months”

Rebecca Larkin, CPA

The demise of Metnor and Tolent – plus the appointment in early March of liquidators for County Durham-based All Saints Construction – hints at structural weakness in the North East construction sector, but Glenigan noted a 19 per cent increase in project starts in the region over the past three months compared with September-November 2022.

Regional construction output data from the Office for National Statistics (ONS) also suggests that activity in the North East is not performing any worse than other regions, said the CPA’s Larkin.

In fact, she told CN: “In nominal terms it actually had the strongest growth in output in 2022.”

Looking at the UK as a whole, Larkin noted: “Government insolvency data shows that specialist contractors account for the largest proportion of construction insolvencies, as they have done historically, but confirms that issues are moving up the supply chain as smaller firms collapse; insolvencies among main contractors have been on an upward trend over the last 18 months.”

Industrial concrete flooring specialist Malin was another relatively large company to enter administration in February. The Cheshire-based firm posted turnover of £25.6m in 2021, but this was down from £38.4m in 2020, although its cost of sales was lower.

Reading-based civils contractor Outco Surfacing (formerly NMC Surfacing) appointed Interpath as administrator on 10 February. The company had been struggling for a while. Its most recent accounts revealed an operating loss of £986,000 from turnover of £16m for the nine months ending 30 September 2021, due to what Outco described as “challenging market conditions” and “efforts to tie customers into longer-term agreements which affected our attempts to retain the same percentage of margins”.

On 1 December last year, Outco reached an agreement with its senior debt provider to reset the group’s financial convenants “to provide the flexibility and headroom to execute its future growth plans”, and at the same time it secured £3m of additional funding from its shareholders via loan notes.

February also saw a major building contractor in the Welsh market enter administration, when RL Davies & Son (also known as RLD Construction) called in BDO on 24 February. While turnover in its last accounts (up to 31 December 2020) increased by about £1m to £13.9m, the company made a loss of £1.9m compared with a £757,000 loss the year before.

SD Samuels (Special Projects) Limited formally entered administration on 17 February, although the Essex-based roofing and cladding specialist filed a notice of intention the previous month.

The company had been a preferred supplier to top-tier contractors such as ISG, Kier, Morgan Sindall and Vinci, and was also involved in the new Anfield Road stand project at Liverpool FC for Buckingham Group.

Insolvencies or increased insolvency risks are likely to be driven by which sector a company operates in, Larkin noted. “Contractors and subcontractors most closely linked to residential, commercial or industrial have been hardest hit by deteriorating confidence over the economic outlook, rising interest rates and squeezed household and business finances,” she said.

“In contrast, infrastructure, large projects and projects in regulated sectors are helping maintain activity, while those focused on public sector projects may find that clients are more understanding of cost issues.”

Grounds for optimism?

“The headline impact of business insolvencies always seems to be the immediate loss to businesses, economy and jobs, but we have been hearing about this anticipated wave of insolvencies for some time – indeed many have talked about how the businesses that remain can hoover up the leftovers from a culling of ‘zombie businesses’ and become stronger,” said Emma King, partner at Eversheds Sutherland.

There are some signs of a brighter future, though: according to the latest Purchasing Managers’ Index (PMI) data from S&P Global and the Chartered Institute of Procurement & Supply (CIPS), the headline construction rating rose to 54.6 in February, up from 48.4 in January and the highest monthly indicator of activity since May 2022.

Lloyds Bank’s Jones also saw some reasons to be cheerful. “The high watermark of inflation looks to have been hit and contractors are optimistic it will fall further,” he said. “While housing looks set to face a tricky period as interest rates rise and the cost of living continues to affect households’ spending power, the infrastructure market, underpinned by HS2, remains strong, while demand in London is providing a healthy pipeline of work in the commercial sector.”

Larkin was more cautious, arguing: “There is likely to be more financial strain [on construction businesses] as lower demand and lower activity combine with existing inflationary and financial pressures, which so far, have been alongside relatively strong demand.

“There is also likely to be more of the ‘second round’ effect as bad debts left by those that have already collapsed worsen the finances of those still in operation.”

As if to underline her point, the first week of March saw Jersey contractor Camerons Ltd cease trading, the collapse of Hertfordshire-based Jarvis Contracting, and cladding contractor Jessella call in FRP Advisory.

“We expect insolvency across the board to increase this year for SMEs as they continue to grapple with the ongoing cost-of-living crisis, energy prices, flat consumer confidence and inflation that is yet to reduce as it’s brought more under control,” said Palmer.

Company name	Location	Date of administration	Type of documents filed	Construction activities
ALMA SC LIMITED	Bolton	9 Feb	Administrative receiver appointed	Development of building projects
ARCH REALISATIONS 2023 LIMITED	Lancashire	17 Feb	Administration order	Plastering
BUILT4LEARNING LIMITED	Lancashire	28 Feb	Administration order	Development of building projects
CAMBERLEYBELL LTD	Surrey	20 Feb	Administrative receiver appointed	Construction of domestic buildings
CHARWORTH HOMES LIMITED	Grimsby	6 Feb	Administration order	Construction of domestic buildings
CROSSLANE (HUNTINGDON STREET NOTTINGHAM) LIMITED	Manchester	1 Feb	Administration order	Development of building projects
ETS 2023 LIMITED	Oxfordshire	17 Feb	Administration order	Plumbing, heat and air-conditioning installation
EUROPA HOUSE DEVELOPMENT LIMITED	Northampton	20 Feb	Administrative receiver appointed	Development of building projects
GOLDBERG DEVELOPMENT GROUP LIMITED	Croydon	20 Feb	Administrative receiver appointed	Development of building projects
HENRAD PLUMBING & HEATING LTD	Colchester	27 Feb	Administration order	Plumbing, heat and air-conditioning installation
J & J HARRISON LIMITED	Oldham	21 Feb	Administration order	Plumbing, heat and air-conditioning installation
KEMARK LIMITED	Armagh	27 Feb	In receivership / administration	Development of building projects
LECI CONSTRUCTION LTD	Buckinghamshire	15 Feb	Administration order	Construction of commercial buildings
MALAYSIAN INVEST LIMITED	Manchester	22 Feb	Administrative receiver appointed	Development of building projects
MALIN INDUSTRIAL CONCRETE FLOORS LIMITED	Cheshire	7 Feb	Administration order	Site preparation
ME DEVELOPMENTS (LONG SUTTON) LIMITED	Surrey	23 Feb	Administrative receiver appointed	Development of building projects
ME DEVELOPMENTS (UPTON GREY) LIMITED	Surrey	9 Feb	Administrative receiver appointed	Development of building projects
METNOR CONSTRUCTION LIMITED	Newcastle	24 Feb	Administration order	Construction of commercial buildings
ORMISTON HOUSE LTD	Northampton	20 Feb	Administrative receiver appointed	Development of building projects
OUTCO SURFACING LIMITED	Reading	7 Feb	Administration order	Construction of roads and motorways
PARADIGM WELLINGTON LIMITED	Teesside	2 Feb	Administration order	Development of building projects
R. L. DAVIES & SON LIMITED	Clwyd	22 Feb	Administration order	Construction of commercial buildings
RSDEV LIMITED	Bolton	9 Feb	Administrative receiver appointed	Development of building projects
S D SAMUELS (SPECIAL PROJECTS) LIMITED	Essex	17 Feb	Administration order	Roofing activities
SOCIAL ENERGY LTD	Yorkshire	27 Feb	Administration order	Construction of utility projects for electricity and telecommunications
TOLENT CONSTRUCTION LIMITED	Gateshead	17 Feb	Administration order	Construction of commercial buildings
TOLENT LIVING LIMITED	Gateshead	17 Feb	Administration order	Construction of domestic buildings
TOLENT SOLUTIONS LIMITED	Gateshead	17 Feb	Administration order	Development of building projects
ULTRA SUREFIRE LIMITED	Buckinghamshire	24 Feb	Administration order	Other construction installation
WAYPOINT DEVELOPMENT AND CONSTRUCTION LIMITED	Lancashire	2 Feb	Administrative receiver appointed	Development of building projects