Cleveland Bridge also struggled to pass on steel price hikes to all its customers
Insolvency practitioners from FRP have set out their best estimate of debts while they wait for a detailed return from directors setting out details of the contractor’s affairs.
Among the headline creditors, £6m is owed to the Arab National Bank, nearly £3m to HMRC and £2m to UK Export Finance.
Unsecured trade creditors are owed around £8m and company backer Al Rushaid Investment Company is due at least £3.8m.
In a report for creditors, administrator FRP said Cleveland Bridge had been sigificantly impacted by delays caused by Covid leading to exceptional costs of £1.7m.
The firm was also hit by a delay in a high margin contract due to the political coup in Sri Lanka.
The steelwork contractor was due to report a loss of £3.62m in 2020.
Among the specialist contractor’s mounting problems in early 2021, an estimation error on one contract resulted in an £11m project achieving a zero gross profit.
This contract made up the majority of production hours in the first quarter of the year.
FRP said that Cleveland Bridge had also failed to successfully pass on sharp steel price hike to all its customers.
As things deteriorated credit limits with suppliers holding credit insurance were reduced due to the poor trading.
In June, Cleveland Bridge engaged a team of turnaround specialists to restructure the business as managing director Chris Droogan also handed in his resignation.
The process revealed that an extra £12m was required to fund the business to the end of this year.
But Cleveland’s Saudi Arabian owners refused to provide the extra funding leading to the historic bridge builders administration on 22 July.
FRP said unsecured creditors were not expected to see any of the cash they were owed.
Article first appeared - https://www.constructionenquirer.com/2021/09/15/cleveland-bridge-uk-collapsed-owing-21m/