Scunthorpe-based contractor Clugston Group is expected to confirm on Friday that it has appointed an administrator, leaving hundreds of jobs under threat, according to various reports.
Update: James Clark and Howard Smith from KPMG’s Restructuring practice have been appointed joint administrators to Clugston Group Limited and Clugston Construction Limited.
In total, 150 of the companies’ 412 employees have been made redundant by the move.
Administrators will continue to trade certain divisions and are seeking to sell valuable contracts.
James Clark, Associate Partner at KPMG and joint administrator said: “The directors of the business have worked tirelessly trying to rescue the group and have pursued discussions with a key stakeholder about a potential rescue deal.
“Unfortunately, it has not been possible to obtain the funding required, and as a result, the directors concluded they needed to appoint administrators to protect the value of business.
“Our focus over the coming days will be to seek buyers for the contracts and divisions, and to liaise with those employees who have been made redundant, ensuring they are provided with the support and information they need to claim their statutory entitlements from the Redundancy Payments Office.”
Director, Tim Doggett: “Despite the unfortunate news regarding parts of the wider Group, Clugston Distribution Services Limited continues to trade as normal.
“We are a standalone entity and will continue deliveries as scheduled.
“We are working closely with various stakeholders to ensure continuity of supply and we thank our suppliers, customers and of course our employees for their continued support.”
The Group, which employs over 400 people with operations stretching across the UK, owns Clugston Construction and the haulage business Clugston Distribution Services. It also set up a new division on October 28 called Clugston Group Holdings with just one shared listed at £1 in value.
According to Construction News, staff at Clugston Construction were reportedly left in shock after it was revealed to them on Thursday the firm had collapsed. Over 250 staff are understood to be immediately affected.
The report also claims that staff were asked to clear their desks and will not be given final payments before Christmas. They were also told to return for meetings on Friday morning.
The Construction Enquirer reports that subcontractors have been contacting them for several weeks, warning that payments have been stopped with no explanation and the firm are understood to be bogged down in several legal claims for payments.
Clugston Group Director David Clugston, who is due to take over the business from his father next month, told the Grimsby Telegraph: “We are still working with KPMG, the administrator, to save jobs related to key construction contracts and protect creditors.
“The distribution business is unaffected by this and is continuing to trade.”
Insolvency partners with accountant KPMG are expected to be formally appointed as administrators on Friday, but this has yet to be confirmed. Documents filed with the court on December 3 allegedly stated that Clugston Group, Clugston Construction and Clugston Distribution Services have all filed notices of intention to appoint administrators.
In the most recent accounts, dated to January 31, 2018, Clugston Group suffered a loss in profit before tax of £470,000. In November, Clugston Group Limited also announced the retirement of Chairman John Clugston as of January 31, 2020.
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