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Lagan’s collapse: Scale of debts and creditors revealed

KPMG’s administrator’s proposals have revealed that three of the Lagan companies put into administration at the beginning of March were liable for a total of £29.4m.

Administrator’s proposals for Lagan Construction Group Holdings have yet to be filed.

Here, CN takes a detailed look at what KPMG’s report reveals for the various businesses.

Lagan Construction Group Limited

Lagan Construction Group Limited accounted for the lion’s share of the total money claimed by creditors, with £26.4m outstanding.

It had one secured creditor in Danske Bank, which had loaned the company £3.9m secured against its assets.

Preferential creditors, which are the 113 employees made redundant following the collapse, are owed £111,200 by the company for unpaid wages and holiday pay.

Among the parties claiming money from the failed firm are the unsecured creditors, who are owed £22.3m.

“Lagan Construction Group’s joint venture partners are owed £12.5m while other trade creditors are owed £9.1m”

Within this, Lagan Construction Group’s joint venture partners are owed £12.5m while other trade creditors are owed £9.1m.

A total of 11 trade creditors are owed more than £100,000 by the company.

The biggest single creditor is listed as mechanical and electrical contractor King & Moffatt UK, which is owed just over £851,000, of which almost £267,000 is in the form of retentions.

Other major creditors including Arup Ireland, which is owed £245,000, and roof light and access specialist Lareine Engineering, which is owed £322,000.

HMRC is also listed as an unsecured creditor, owed £719,000.

KPMG is now trying to raise funds to pay the creditors by selling the company’s assets.

However, the accountant has said that unsecured creditors are unlikely to recoup any funds, other than through a prescribed part.

This would be a maximum of £600,000 – but probably less – spread across all the unsecured creditors.

The statement of affairs prepared by Lagan Construction Group directors claims the company is owed £16.3m by debtors.

Most of this is for work in progress, which they value at £8.5m, while £1.9m is owed from its joint ventures.

KPMG said it was in discussions with Lagan Construction Group’s JV partners to try to agree “clean exits” from the company’s obligations under the contracts.

Just over £2.2m of retention money was held against the group when it collapsed.

“The company’s 2016 accounts showed it had experienced a significant jump in turnover. However, over the same period operating profit dropped from £3.7m to £1.9m”

KPMG’s report also showed that Lagan Construction Group Limited had burnt through more than £50m in cash in two years.

The company’s last financial accounts, which covered the 12 months to 31 March 2016, showed it had £52.1m in cash and equivalents, contributing to total current assets of £82.2m.

By the time KPMG was appointed as administrators just under two years later on 5 March 2018, the outfit had no cash in the bank.

The company’s 2016 accounts showed it had experienced a significant jump in turnover, up from £109m to £149.1m in just 12 months.

However, over the same period operating profit dropped from £3.7m to £1.9m.

Lagan Building Contractors Limited

Lagan Building Contractors Limited was the second largest of the businesses put into administration by the parent company and owed £2.74m to its creditors.

Unsecured trade creditors accounted for almost all of this, with £2.69m in outstanding payments.

Almost 40 per cent of this was owed to one creditor, the fit-out company H & J Martin, which is owned by the Lagan parent company.

“Lagan Building Contractors Limited had turnover of £29.9m for 2016. In that year it made a £3.6m operating loss and had no cash in the bank”

Other large creditors were aluminium parts supplier Aluprof UK, which was owed £343,000, and precast concrete specialist SCC Design Build, which was owed £133,000.

A total of 44 employees were made redundant when the building contracting arm went into administration, and their claims as preferential creditors stands at £50,400.

Lagan Building Contractors Limited was a smaller operation than the main construction business, with turnover of £29.9m for 2016.

In that year it made a £3.6m operating loss and had no cash in the bank.

When its accounts for the financial year to 31 March 2016 were filed on 29 December 2016, the directors said the business been suffered “significantly reduced margins”, mainly due to cost inflation.

However, the directors said the division would return to profitability in 2017.

Lagan Water Ltd

Administrators’ proposals have also been filed for Lagan Water Ltd, a small business exempt from filing full accounts.

It owed unsecured creditors almost £303,000, while 10 employees made redundant have a preferential creditors’ claim for £16,000.

Administrator’s proposals for Lagan Construction Group Holdings have yet to be filed.

The holding company’s remaining 26 subsidiaries will continue to operate. These include Lagan Operations and Maintenance Limited, FK Lowry Piling Limited, Dew Piling, H&J Martin, Lagan Construction Aviation, Lagan Construction Limited, Lagan US inc, Coastal Industrial, and Lagan Construction Services.

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    Lagan’s collapse: Scale of debts and creditors revealed

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