Just one of Jarvis Rail and sister business Fastline’s creditors looks set to receive any money from the two collapsed companies, leaving £93 million of debts unpaid.
According to the creditors’ report, administrators from Deloitte do not expect funds to be available to pay either the company’s preferential or unsecured creditors, with £33.7m owed to trade creditors, £28.1m owed to employees and £19.7m owed to HM Revenue and Customs.
A £17m loan from Bank of Ireland subsidiary Burdale Financial Services, which is the only secured creditor of Jarvis
Rail and plant firm Fastline, will be repaid.
According to the report, one other unknown creditor is also claiming to have fixed charge security over some of Fastline’s assets. This is being investigated. The two firms, which formed the bulk of Jarvis plc, also had £79m of inter-company debts.
Jarvis plc - once the UK’s biggest construction company - was placed into administration in March after a plunge in rail and plant work. Just 98 employees now remain across the company.
On the first day of administration, 1,159 employees were made redundant, and Deloitte said that 1,099 completed redundancy forms have now been processed.
According to the creditors report, Jarvis Rail estimated assets available to preferential creditors at around £5.7m, but only £50,000 is likely to be realised.
Jarvis Rail’s total debt to unsecured creditors was £82m, of which £27.5m is owed to trade creditors, £14.8m to HM Revenue and Customs and £18.9m to former employees including redundancy claims. It also owes, but is unable to pay, £227,000 in pension contributions.
The majority of Fastline’s deficit relates to a loan within the Jarvis Group. Its next biggest debt, which stands at £9.2m, is to employees.
Meanwhile, the disposal of Jarvis plc’s most saleable assets, Fastline’s rail renewal plant, has proved difficult given the volume and specialised nature of the equipment as well as its trackside location. Thus far, Deloitte has managed to sell just £17,500 of Fastline assets.
Plant specialist Edward Symonds, appointed by Deloitte, has advised that it could take up to two years to sell the plant, which include 108 On Track Machines. It plans to sell the plant via an online auction over an eight-month period.
Unlike many other parts of the Jarvis group, Jarvis Rail and Fastline were not placed in administration on 25 March 2010.
The report explains that Deloitte was legally obliged to first become interim receivers and managers of the business. The two companies - owing £7m to customers and subcontractors, as well as £3.5m in wages - required immediate funding to stay in business.
In a final attempt to maintain the businesses as going concerns, Deloitte entered discussions with Network Rail on 30 March to negotiate funding for four weeks, but the client declined to pay for work in advance and Jarvis Rail
and Fastline were placed into administration the following day.