ICSM Business News: construction firm employing more than 1,600 contractors is on the verge of collapse after a rescue deal was pulled - with suppliers set to lose millions

ICSM Business News: construction firm employing more than 1,600 contractors is on the verge of collapse after a rescue deal pulled - with suppliers set to lose millions

By Harry Mottram: Not since Carillion has such a major construction outfit look set to go bust, but that is the likely situation for the Manchester firm Avonside.

Backed by £12 million pounds by NatWest Bank the plug is likely to be pulled this week and the company liquidated after Sky News reported a buyer could not be found.

With hundreds of staff and hundreds more of contractors the business is heavily in debt with another lender Core Funding also concerned its loans could go west. NatWest is thought to be likely to recover some of its cash but suppliers and the 600 contractors may not have their invoices fully settled.

Sky News’ Mark Kleinman reported: “Avonside employs 450 people on a full-time basis, with a further 1,200 contract labourers on its books. The company's collapse underlines mounting concerns about the wider UK economy, with data published on Tuesday showing that construction activity contracted in August for the second consecutive month. Begbies Traynor Group, the restructuring firm, had been seeking to complete a takeover of Avonside last week.”

Ian Carrotte of ICSM said it was a desperate situation for the suppliers who could be hock for millions collectively. He said: “The old story of ‘we’re too big to fail’ has been trotted out to finance directors chasing payment. Because of big financial backers there was an assumption that a high street bank would not let them fail. My understanding is that poor financial control and unprofitable acquisitions could be the problem.”

Avonside Group is one of Britain’s largest integrated service providers, with 48 strong branch network. It iworks with  supplier/partner to house builders, local authorities, housing associations and specifiers and covers all aspects of construction.


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