Specialist Engineering Contractors’ Group warns that failure of Durtnell & Sons now raises concerns for its supply chain
The collapse of Durtnell & Sons, which claims a history going back over 400 years, is evidence that construction is in the midst of a bona fide financial crisis, according to the SEC Group, which represents the interests of specialist contractors.
The contractor, which has been owned by the same family since the 1600s, is the latest in a wave of insolvencies, the Group warned. There are now fears that Durtnell’s supply chain will lose over three-quarters of a million pounds-worth of retentions that were held by the company.
SEC Group said: ”Whenever construction firms go into insolvency, the retentions withheld from their supply chain are invariably lost. An examination of Durtnell’s March 2019 accounts shows that retentions totalling £630,000 are owed to Durtnell’s supply chain. The accounts covered a 9-month period and, therefore, the annualised figure will be closer to £840,000.”
Rudi Klein, the SEC Group CEO said the impact would be felt far beyond the contractor and its supply chain: “At the top of the industry, the extremely weak balance sheets of the largest UK contractors are creating a ‘ticking time-bomb’. Trade credit insurers are now withdrawing cover from many of these companies leaving their supply chains wholly exposed…The retention monies belong to the businesses – mostly SMEs – in Durtnell’s supply chain and for the most part would have represented their profit margins.”
Mr Klein urged the government to speed up its adoption of the Aldous Bill, currently before Parliament, which seeks to protect retention monies from upstream insolvencies.
The Construction (Retention Deposit Schemes) Bill aka the Aldous Bill, was introduced in January 2018 asking for retentions to be ring-fenced in a secure account. Retention monies are monies deducted as security in case a firm fails to rectify non-compliant work. In practice they are deducted to bolster the working capital of the party withholding them or even to be invested in the overnight money markets. The Bill is currently stalled, due to disruption to the Parliamentary timetable caused by Brexit.