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Thu November 30 2023

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Subbies face losing millions owed by Browns Construction

1 Nov 11 Trade creditors of Cheshire contractor Browns Construction, which went into administration in August, are likely to lose almost half the £6.5m owed to them.

Nearly 400 unsecured creditors face an anxious wait as administrators for Browns fight for payments from long-running contract disputes against the company, reported the Manchester Evening News.

But Begbies Traynor's administrators said it can only claw back a maximum of £3.3m.

Browns, which was established in 1860, was owned by London-based Headcrown Group from 1985.

It collapsed with liabilities of over £7m, including £910,246 owed to bankers Lloyds TSB.

But more than £6.5m is owed to unsecured creditors, including £1.6m to 272 sub-contractors, who have claims ranging from £9 to £90,000.

The 122 trade creditors are owed £672,165, with claims from from £6 to £83,000. HM Revenue & Customs is owed £130,632 and former Browns employees are owed £657,000.

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Around £3.5m is owed to Headcrown.

In a report from administrators, Browns' former finance director Nigel Jepson said: “The downturn in the building industry following the recession had a severe impact on the company's construction activities whereupon additional working capital was required to fund a number of new contracts as well as a number of contract disputes which were occurring on a number of current contracts.

“Financial support was provided by Headcrown and a total of £3.6m was injected between 2009 to date over a number of transactions.

“Unfortunately trading conditions deteriorated and in the absence of any visible evidence of a strengthening cash flow position, Headcrown advised on August 16 that they were no longer prepared to offer financial support to the company.”

Begbies Traynor was subsequently appointed as administrators and work on all Browns' current contracts was halted, including the conversion of a school near Matlock, Derbyshire, into retirement flats, a hotel in Dartmouth, a scheme at Cardiff University and the construction of several homes in the Wilmslow area.

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