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500 left skint by Controlled

Subcontractors and suppliers will not get a penny of the £15 million owed by the failed Controlled Demolition Group.
Construction News can reveal how the company managed to dump its debts by going into administration for a matter of hours. The move has hit 500 firms that are currently being sent a report by accountant Ernst & Young.

Joint administrator Simon Allport said in a letter: 'I can confirm that no distribution will be made to unsecured creditors and accordingly we do not propose to convene an initial meeting of creditors.'

Subbies form the majority of unsecured creditors owed more than £10 million, according to the report.

The news will shock companies clinging to the hope of reclaiming their cash after Controlled boss Darren Palin said he hoped to repay 90 per cent of debts by Christmas.

Controlled briefly went into administration in September and was renamed CDG Realisations so that its name and assets could be sold to Linkway Manufacturing owner Richard Burt for £1.93 million.

CDG Realisations and Controlled Group Holdings together also owed £2.7 million to former financial backer 3i.

The venture capitalist and former 40 per cent shareholder pulled out of the company, which forced Controlled into administration.

At the time managing director Mr Palin said: 'We were left between a rock and a hard place and simply had no choice.'

Mr Burt, the new owner and only secured creditor, is owed £4.8 million.

Controlled has cut its staff from 140 to 100 through redundancies and natural turnover since the company went under. Around five administration staff were laid off and some site operatives have not had short-term contracts renewed.

A spokeswoman for the company said: 'Everything is back to normal. The atmosphere is very much business as usual.

'Controlled has changed its focus from pushing for turnover - which was what 3i wanted it to do - to making the company profitable. It was a

£20 million turnover company but now it is more likely to be in the region of a £12 million turnover company.'

English Partnerships pulled the plug on a £3.5 million demolition and asbestos removal job at the former Greenwich District Hospital in south-east

London when Controlled went into administration.

A spokeswoman for the regeneration agency said: 'Under

the framework agreement with English Partnerships a contract is terminated if that company has gone into administration.'

By Sophie Kernon