The scale of the financial meltdown at GB Building Solutions has been laid bare after an administrators report revealed it owes its creditors £82.8m.
The report, seen by Construction News, shows the defunct contractor still owes a mammoth £76.7m to non-preferential creditors.
This figure includes £30.3m to trade creditors, generally subcontractors that may not see a penny, with the entirety of the firm’s £5.4m of assets likely to be swallowed up by bank debts and £400,000 owed to former staff.
Subcontractors are also owed a further £9.2m in retentions.
Among the largest creditors according to a list supplied by GB Building Solutions’ directors are Speedy Hire subsidiary Speedy Asset Services, which is owed more than £445,000, and Balfour Beatty Engineering Services, owed more than £238,000.
GB Building Solutions was owed around £15.9m on ongoing contracts when it went bust in March. BDO is working with Capita “to ascertain what amounts are recoverable” but added that recovering money “in the short term will be challenging”.
Debts on completed contracts are worth around £9.5m but less than £60,000 has so far been repaid, with BDO again admitting that “the collection process will
BDO also revealed that all 384 employees at GB Building Solutions were made redundant at the time of or shortly after the firm went into administration.
Any wages owed to staff have been capped at £800 per employee.
The administrators’ report also revealed that the contractor’s holding company GB Group Holdings was left owing just short of £39m when it also went bust, of which £8.8m is owed to other companies in the group.
The 100-page report further detailed the events that led to the collapse of the companies.
During 2014, GB Building Solutions “encountered issues with a number of legacy contracts” putting “a significant strain on [the group’s] cashflow facilities”, including a £6m overdraft provided by Lloyds Bank.
The situation was exacerbated by disputes over completed contracts, delaying payment and “adversely affecting forecast working capital requirements”.
In February, management estimated the working capital gap at between £6m and £10m but were rebuffed by both the bank and shareholders when they asked for support.
Directors approached BDO on 17 February “to conduct an options review focusing on short-term cashflow, fundraising options and restructuring advice”.
When BDO could not raise money through sales of either businesses or individual contractors, the decision was made to appoint administrators in 4 March, with the company ceasing to trade the following day.