Interserve is seeking administrators to ensure continuity of services, while concerns are raised about the impact on financing in the wider Welsh construction sector from Dawnus’ collapse
Two major contractors working across the UK construction sector have this week announced they are entering administration.
Both Interserve and the Dawnus Construction Group have now sought administrators for their operations, raising fears about the wider impacts across the UK supply chain on funding.
Interserve has announced that it has applied for administration to try and sell its businesses and assets to a new operator that will be controlled by the company’s lenders.
The company added, “Following the sale, the intention is for an alternative transaction to be implemented involving the equitisation of approximately £485m of existing debt and the injection of £110m of new money into the group.”
“All companies in the group other than the parent company will remain solvent, providing continuity of service for customers and suppliers.”
The Welsh arm of the Specialist Engineering Contractors Group has said meanwhile that the collapse of the Dawnus Construction Group could be equally as destructive to the Welsh building sector as the fall of Carillion was to the wider UK industry last January.
Dawnus is described by the association as the lead contractor for major infrastructure projects across Wales in the public sector.
Catharine Griffiths-Williams, national executive officer for SEC Group Wales, warned that the scale of Dawnus’s worked was expected to significantly affect the wider engineering sector in Wales.
She said, “Nearly all the work carried out by Dawnus was outsourced to SMEs which will now bear the brunt of the losses from the insolvency. Again, this highlights the financial fragility of the large construction firms and the consequent risks to their sub-contractors which could now lose millions of pounds.”
“The impact on the Welsh economy could be very damaging. There is also a human cost involved. I’m very concerned for the people in Wales who worked for Dawnus and its sub-contractors whose jobs will now be at stake.”
SEC Group Wales said it was calling for public bodies in Wales to adopt ringfenced project bank accounts among a number of changes to protect money owed to suppliers and sub-contractors.
Ms Griffiths-Williams said the organisation also backed better protection for retention monies that risked being lost due to Dawnus’ collapse.
She added, “These retention monies belong to the firms from whom they have been withheld. Again these monies must be protected and to that end we will be inviting the Welsh Government to legislate to provide such protection.”
A range of associations such as BESA, the ECA and the SEC Group have been pushing for parliament to introduce new legislation to mandate ringfenced retentions and the use of project bank accounts in major construction projects. The campaign pre-dates the collapse of Carillion in January 2017, which has created major uncertainty for the construction industry.