Your browser is no longer supported

For the best possible experience using our website we recommend you upgrade to the newest version of your browser.

Your browser appears to have cookies disabled. For the best experience of Construction News, please enable cookies in your browser.

Welcome to the Construction News site. As we have relaunched, you will have to sign in once now and agree for us to use cookies, so you won't need to log in each time you visit our site.
Learn more

Connaught’s subbies owed £40m

Subcontractors have been left with £40 million in unpaid invoices by Connaught’s collapse - and fear they are unlikely to see more than 1 per cent of it.

The council house repair giant went into administration last Tuesday after failing to secure additional funds from lenders.

Administrator KPMG said it was too early to say by how much the subcontractors would be reimbursed. A spokeswoman said more details would emerge when KPMG publishes its creditors’ report in the next six to eight weeks.

Dean Floyd, managing director of Connaught subcontractor Chigwell Construction, said the Essex-based firm was owed nearly £300,000.

“We are not in the best of ­climates,” he said. “Lots of subcontractors won’t be able to get out of trouble with this. I don’t think bankers will support them.”

Mr Floyd said his firm was aware of Connaught’s financial difficulties and had downed tools at the end of July.

“The money was long overdue,” he said. “You couldn’t get any money. Connaught kept fobbing us off for weeks.”

He claimed that tens of thousands of subcontractors were likelty to be owed money, and said he knew several with unpaid bills for between £300,000 and £600,000.

Another source warned: “Connaught owes £40m. Sub­contractors might get a tiny amount, [perhaps] a penny in a pound. The ramifications will be felt throughout the industry for months.”

The collapse of Connaught has caused mass job losses. At the time of going to press, 1,400 workers at its social housing arm Connaught Partnerships had been made redundant, out of a total of 4,200.

Morgan Sindall’s affordable housing division Lovell bought about 80 per cent of Connaught’s social housing maintenance ­contracts for £28m in cash, helping to save the jobs of about 2,800 workers.

Mears followed suit the following day, picking up a further eight contracts for a nominal sum.

It is understood the remaining five contracts - with Norwich City Council, Arun District Council, Raglan Housing Association, Southern Housing, and Town and Country Housing - are unlikely to be sold.

Brian Green, a restructuring partner at KPMG and joint administrator of Connaught Partnerships, said he hoped workers made redundant might find jobs elsewhere.

“We are hopeful that some of these staff would be re-employed by Mears,” he said.“We have now transferred the vast majority of Connaught’s Partnerships’ contracts to new providers, safeguarding the majority of jobs and ensuring continuity of service for tenants.

“To do this within days of the company going into administration is remarkable, and it is a testament to the commitment of everyone involved in securing the future of these contracts in a very difficult situation.”