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Birmingham Post
Birmingham Post
Business
Tom Keighley

Metnor Construction collapsed owing more than £9.3m after lender pulled support

Newcastle contractor Mentor Construction fell into administration owing more than £9.3m to hundreds of creditors across the North East and beyond.

New documents show the Killingworth-based firm, a former Northumberland and Tyneside Company of the Year at the North East Business Awards, was forced to call in administrators when a key funder pulled its backing amid cashflow difficulties caused by pandemic restrictions and rocketing costs of materials.

Specialists from FRP advisory were appointed to the business at the end of February as 80 jobs were lost in the move. As well as rapid inflation, Metnor was said to have suffered loss making contracts. Despite directors looking at various turnaround strategies, the business could not be saved.

Read more: Recycling innovators Descycle secure £4.9m investment ahead of North East plant plans

Secured creditor Lloyds Bank was paid in full prior to FRP's appointment, while more than £90,000 owed to former employees is expected to be paid full, along with around £50,000 owed to HMRC. Meanwhile, the administrators have said unsecured creditors, including scores of SMEs supplies, are expected to paid an as yet unknown amount. In total, more than 440 companies and organisations are owed sums.

Prior to its collapse, the £62m turnover Metnor Construction had been involved in a significant number of projects across the private residential, care, hospitality and retail sectors. Previous projects include three leisure centres in London, Leicestershire and North Norfolk, data halls in Welwyn Garden City and Wembley, a PRS scheme in Rugby and two hotels in the North East

The firm is a subsidiary of Metnor Group, which followed the business into administration last month. The wider £80m turnover group included mechanical and electrical engineering arm Norstead, which closed with the loss of 52 jobs.

Administrators had attempted a fast sale of £20.3m turnover Norstead but no viable offers had been made. The Newcastle and Maidenhead-based operation had delivered work for high profile clients including the likes of John Lewis and the NHS.

The details of Metnor Construction's administration follows similar update from insolvency specialists dealing with the high profile collapse of neighbouring firm Tolent. Administrators at Interpath Advisory have said that some of the 1,060 creditors collectively owed £46m are unlikely to recoup any money.

Documents reveal that Tolent's demise was partly caused by a £10m cost overrun on its key Milburngate site in Durham. A turnaround plan which included disposals had been devised, but poor sales put the business under too much pressure to continue.

*This article was amended on May 4 to remove reference to "a Norfolk-based pressure testing business". As of 2022, Metnor Great Yarmouth is no longer part of the Metnor Group and continues to trade without financial concerns

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