The trade creditors of contractor Dawnus, which entered administration in March, are owed £40.5m, according to new documents filed in Companies House by administrator Grant Thornton.
A total of nine companies within the Dawnus Group collapsed into administration after it hit financial difficulties and no buyer could be found.
Grant Thornton’s statement of affairs also revealed that HMRC was owed a total of £3m in PAYE, National Insurance and VAT, directors’ loans were £667,000 and employee claims totalled £5m.
The administrator’s report detailed how Grant Thornton was first consulted by Dawnus in December 2017 to assist with options to meet funding requirements, as it faced a cash shortfall driven by difficulties with UK contracts.
In March 2018, the group secured a £7m cash injection from HSBC and the Welsh government, as part of a plan to unwind the build-up of historical contract work in progress and refinance or sell certain assets. The group realised £7m in this way and repaid £4m to HSBC and the Welsh government, split equally between the two.
It was allowed to reinvest around £3m in the group to ease cash flow pressures but the group continued to experience a cash shortfall as trading conditions became difficult, credit conditions tightened, and the firm’s revenue from international operations, historically its most profitable division, dwindled.
On 4 December 2018, Grant Thornton was engaged to find a buyer or investment into the group and 52 potential trade buyers and 23 distressed investors were approached. But only two offers were received, of which one was withdrawn, while the other failed the due diligence process.
That left the group facing administration. Meanwhile, the uncertainty around the group’s financial position led to creditors lodging two winding up petitions, subcontractors walking off sites, and the theft of equipment with the removal of vehicle trackers and disruptions to traffic at the Kingsway project in Manchester.
Grant Thornton was finally appointed as administrator on 15 March.
While employee claims for wages and holiday pay up to statutory limits is due to be paid, Grant Thornton warned that both HSBC and the Welsh government may not recover all of their cash. Unsecured creditors are unlikely to receive anything at all.
