Collapsed Clugston Construction has left an estimated £71.5m due to unsecured creditors, new documents have revealed.
An administrator’s statement of affairs lodged in Companies House showed that of the £71.5m, £10.9m was owed to subcontractors creditors, with another £28.6m due to purchase ledger and subcontractor accruals.
Clugston went into administration in late 2019 after facing “acute” cashflow pressures and losses as a result of “onerous” energy from waste (EfW) contracts. KPMG said that the losses, combined with the “increasing likelihood” that the company would not secure a new EfW contract from its joint venture partner CNIM in mid 2020 meant that Clugston’s viability was called into question.
A report for Clugston Group also revealed that the failure of an unnamed key subcontractor in June 2019 resulted in “significant ransom positions from the supply chain”.
At the time KPMG was appointed, Clugston was main contractor on 19 regional construction projects and a subcontractor on two others. It also operated four EfW projects, three of which were in JV with CNIM. It had secured a fifth EfW project that had not yet started. But KPMG concluded that the lack of funds and health and safety considerations meant Clugston could not be traded in administration and had to cease trading.
On 12 December 2019, CNIM bought shares in ten JVs it previously held with Clugston for £1 each, including three JVs that relate to the live EfW projects. As a result, 62 Clugston staff were transferred to CNIM under TUPE regulations.
KPMG said that the most likely exit from administration for Clugston Construction would now be a company voluntary liquidation.
