Subcontractors hit by the administration of McMullen Facades have told Construction News they have been “left in the dark”, with some of the affected businesses now at risk of collapse.
Last week Deloitte revealed that about 350 unsecured creditors were owed a total of £11.3m by MFL Realisations – the remnants of the former McMullen Facades business, which followed parent company Lakesmere into administration in November.
Deloitte, which is carrying out the administration of MFL Realisations, said that the company’s unsecured creditors had “no prospect” of recovering the millions they were still owed.
However, CN has since learned that more than half of this £11.3m – owed mainly to subcontractors and suppliers – has been paid by JRL, the company that bought the assets of McMullen Facades.
As well as the rights to the McMullen name, JRL’s acquisition included a number of ongoing contracts, and the debts JRL has paid were primarily aimed at restarting work on these live projects.
Despite this, dozens of suppliers and subcontractors remain hamstrung by debts they are unlikely to recoup.
One of these companies is Newcastle-based glazing specialist Glass Tech Architectural. It is owed £122,000, with £22,000 of that in retentions.
Helen Swann, who runs the company with her husband David, told CN they were “not expecting to get any of it back” and had been forced to invest their own money to continue trading.
“We’ve had to invest personal funds in the business to keep it afloat,” she said. “The business could have very easily gone under, but we didn’t want that. It’s a good business.”
She said the company had felt “left in the dark” throughout the administration process.
Another subcontractor CN spoke to, which asked not to be named, also remained unclear over their position.
A spokesperson for the company, which is owed around £40,000 according to Deloitte, said they had no idea if they would get any of this money back.
Subcontractors have expressed frustration at the lack of warning in the build-up to Lakesmere’s administration.
Ms Swann said: “We’re very careful about our cashflow and who we do business with, but this seemed to come completely out of the blue with no warning of it happening at all.
“Unfortunately, in construction, that’s just something that tends to happen.”
However, several companies are now on contracts with the new McMullen Facades business under JRL.
Silverside was owed £64,000 by the former McMullen business when it went into administration.
Managing director Paul Homer said: “We had a contract with [the former business] for Carillion doing the Google building in London, and [the new business under JRL] paid us every penny back and gave us a new contract to complete the job.
“We were lucky,” he added.
Another subcontractor, which asked not to be named, was owed around £50,000 and about to start work on another major London project.
“We’ve been in discussion with [the new business] and they’re going to pay us the full amount,” they said.
Both subcontractors said they had been treated well throughout the administration process and praised the communication from the McMullen Facades management.
Mr Homer said the company had been “very fair to us” and had been in touch “from day one”.
However, in both these cases the subcontractors were engaged on large projects with a majority of work still to come.
“People who are needed to carry on with the new company, I think they’ve done pretty well out of it,” Mr Homer said.
The other subcontractor echoed this, adding that it saved them from more serious difficulties.
“We’d just started on site when they went into [administration]. We had the materials [for the job] ready to go,” they said. “I think it would have been different if we had put it all up and were waiting for payment.”
They added: “Usually in these situations, you end up with nothing at all.”
JRL managing director Kevin Keegan told CN it was “disappointing” some subcontractors that were not on contracts carried over to the new firm were set to receive nothing from MFL Realisations.
He also acknowledged that the new business would have to take steps to ensure McMullen’s reputation was maintained.
“I think the only way we can rebuild things is to keep working, keep doing things right and keep going,” he said.