Dunne Group was placed into administration on Tuesday 19th July 2016, with the loss of 524 jobs.
According to information received, the company had a net balance sheet of £12 million at point of collapse and had just banked £4 million in receipts only last Friday. This money was earmarked for outstanding creditors but, as soon as it was banked, Santander – having evidently lost confidence in the business – cut Dunne’s overdraft facility by £4 million, blocking its ability to pay creditors.
Fraught discussions between the bank and its customer ensued but only resulted in Santander retracting all of Dunne's banking facilities by Monday evening and declaring it insolvent.
On Tuesday morning senior Dunne directors personally addressed all staff, subcontractors and clients across the UK, telling them that it was enable to ask people to work when it could offer no guarantee that they would be paid.
Our source within Dunne says that administrators were called in on Tuesday and, working on behalf of Santander, by Tuesday afternoon had changed the locks to all premises and shut off communication systems. [See previous report here.]
“It seems assets are being drawn in by FRP as the balance sheet far outweighs any remaining bank debt,” our source says. “FRP have made it clear through around a dozen agents, each on fees of £10k to £15k per week each, that ongoing contracts or resources are not a priority.”
We are also told that Dunne was scheduled to backdate what is described as “a small overall loss” in its proposed accounts for the year to October 2015, due to a loss on two of its 12 projects and the one-off cost of setting up the London operation.
Backdating this loss was required by accountancy rules. However, an effect of it was to give a big boost to 2016 results, resulting in £6m profit for the first half of fiscal 2016 as well as a strong pipeline for at least the next two years.
“With net balance sheet of approximately £12m, Dunne were positioned very well for the future,” we are told.
A spokesperson for Santander said: "We regret any situation where one of our customers feels the need to appoint administrators. In this case, Dunne Group had been making substantial losses and despite having provided increased facilities on numerous occasions to keep the business trading, the company was insolvent. Therefore the management instructed the appointment of administrators earlier this week."
Santander UK made a profit of £1.3bn last year.