KPMG appointed administrator to Central Building Contractors

KPMG has been installed to oversee the administration of a Glasgow headquartered construction company. Central Building Contractors collapsed due to a significant funding shortfall, which its administrators say was exacerbated by the Covid-19 lock-down.

At the end of 2019, Scunthorpe based construction firm The Clugston Group collapsed into administration, having suffered significant financial problems in relation to a number of energy-from-waste projects. KPMG was appointed to oversee the administration, with James Clark and Howard Smith from the Big Four’s restructuring practice installed as joint administrators to Clugston Group and Clugston Construction.

Five months later, KPMG has been installed as administrator to another UK construction firm. This time it is Glasgow headquartered Central Building Contractors, which has collapsed, with the company having similarly suffered from “challenging” trading conditions in the construction sector, and encountering reduced margins, contract disputes and delays in the commencement of a number of significant projects.

Established in 1971, the company provides a range of construction design, development and maintenance services throughout Scotland, employing 159 people. Unfortunately, amid the current coronavirus lock-down, the company’s directors were unable to plug a “significant funding shortfall” that has led to it appointing Blair Nimmo and Geoffrey Jacobs as joint administrators. The pair have subsequently been required to make some 148 employees redundant upon their arrival.

James McAlpine, Director at Central Building Contractors, said, “Already difficult trading conditions have been greatly exacerbated by Covid-19 which has made our financial position unsustainable. It is with significant regret that administration has been necessary. We have been very fortunate to have loyal and hard-working staff, a supportive supply chain and professional partners, many of whom have worked closely with the business for a great many years. We will work closely with the Administrators to ensure every possible assistance is provided to all our employees during this exceptionally difficult time.”

Just 11 members of staff have been retained to assist with the administration process. This consists of the joint administrators “rapidly exploring” whether an early sale of some of the business and assets can be secured, including three freehold properties, numerous contracts, its order book, work in progress and construction equipment.

Nimmo, who is also KPMG’s UK Head of Restructuring, said, “Central Building Contractors has a rich history and is a well-known and highly regarded business in Scotland… The business faced a range of cash-flow challenges in recent times, which were amplified by the recent Covid-19 lockdown… We will be working to support the employees and have already initiated matters with relevant government agencies to ensure the full range of support is available to all those affected.”