Creditors face huge losses from NMCN administration

11 January 2022 Consultancy.uk 2 min. read

Debts for unsecured creditors for construction firm NMCN has doubled since the firm collapsed in October, according to reports in the British press. Professional services firm BDO is currently under investigation for its auditing of the company leading up to its demise.

Also known as North Midland Construction PLC Group, NMCN operated nationally with twelve strategically located regional offices and workshops. The firm provided engineering and management consultancy services internationally.

In October 2021, a disclosure by NMCN stated it was “no longer able to continue trading as a going concern,” after it collapsed following its failure to secure a £24 million refinancing deal with SVELLA, an investment and acquisition firm. Administrators from Grant Thornton were appointed shortly after, and have since sold off many of the firm’s key assets.

Creditors face huge losses from NMCN administration

Sadly no buyer stepped forward to take on the group’s buildings division, which – along with a number of other jobs that have not been saved – resulted in 80 redundancies. Elsewhere, though, SVELLA, which buys controlling interests in underperforming businesses, bought NMCM’s telecoms, plant hire, transport and accommodation business divisions of NMCN, securing almost 700 jobs. Galliford Try meanwhile bought its water business, including Lintott, for £1 million, protecting around 900 jobs.

However, while the quick sale of NMCN’s core units was in pre-pack deals, enabling the saving of many jobs, they have left creditors facing multi-million losses. According to UK newspaper The Times, debts to unsecured creditors have soared, rising from an estimated £60 million in October to around £115 million in losses.

Major losses

The Times further reported that the unsecured creditors include HM Revenue & Customs, owed £6.7 million, as well as “Ashfield district council, NMCN’s local authority, which is owed £920,587, suppliers Doosan Enpure, a Birmingham water industry specialist, owed £2.3 million and Matchtech, and an engineering recruiter owed almost £1.4 million.” Hardest hit of all, though, some 2,380 supplier claimants are owed an estimated £69.7 million, while NMCN’s employees are owed an estimated £15.6 million.

The collapse of the 75-year-old UK listed construction group also triggered a regulatory investigation. The Financial Reporting Council (FRC) announced in late 2021 that it would launch a probe into BDO in relation to its audit of NMCN. The probe is being conducted by the agency’s Enforcement Division, and focuses on BDO’s work on NMCN’s financials for the fiscal year ended December 31, 2019.

While the FRC did not provide any further details in its press release, BDO issues a statement on the investigation. A spokesperson from the firm pledged to “obviously cooperate fully with the FRC during its enquiries and assist with any further information it needs”, however as the investigation had started, they added “it would be inappropriate to comment any further.”