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Connaught collapse hits subcontractors

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, many of which will be from the HVAC sector, would be reimbursed. A spokeswoman said more details would emerge when KPMG publishes its creditors’ report in the next six to eight weeks.

‘We are extremely concerned by the likely knock-on effect of the company’s demise,” said HVCA deputy chief executive Roderick Pettigrew. “Many HVCA members and other specialist sub-contractors were involved in the local authority contracts managed by Connaught. We are advising them how to go about recovering any money owed to them.

“However, there is a potential positive in all of this because much of Connaught’s work was service and maintenance of essential public sector buildings and this work will simply have to continue. HVCA members are ideally placed and possess the technical background to fill the gap.”

Mr Pettigrew added that it would be hard to assess the scale of the losses until the administrators made that information available.

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.”

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 about 2,800 jobs.

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.”

 

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