North East construction company Tolent Plc collapsed owing debts in excess of £46m to more than 1,000 creditors, new documents reveal.
The Team Valley-based group fell into administration in January, telling how huge losses on its largest ever contract – the £85m Milburngate development in Durham – led to its eventual demise and 356 redundancies. Administrators at Interpath Advisory were appointed to seek solutions for the assets of the group.
Now, two statements of proposals from administrator Interpath Advisory have been issued covering Tolent Plc and Tolent Construction. The document covering Tolent Constuction includes details for Tolent Plc and other businesses including Tolent Living, Tolent Solutions and Tolent Homes. The statement of affairs for the group, which was involved in 16 live contracts when it collapsed, shows the total deficiency topped £47.96m, and administrators said unsecured creditors owed more than £46m are unlikely to recoup any cash.
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The proposals includes a long list of around 1,060 creditors who are owed money by the business. The update from administrators reveals how during 2022, the group incurred significant losses on the Milburngate scheme and took steps to stabilise its financial position, by selling assets – including 200 acres of land owned by a subsidiary – and raising shareholder funds via a rights issue.
But the document says a slow end to the year sparked the final chain of events, saying: “Whilst the construction of the site was substantially completed in 2022, the group experienced delays in final sign-off of the development which absorbed significant management time. In total, project costs in relation to Milburngate overran by approximately £10m and presented strain on the group’s financial headroom/available cash.
“The group prepared a strategic plan, which had including further asset sales and sales of certain business, which was expected to be delivered in the first half of 2023. However, sales in December 2022 and January 2023 were significantly below forecast and the strategic plan could not be accelerated in response to the resulting unsustainable cash pressure."
Its says the group sought alternative options to address its short-term funding requirement, including negotiating an agreement with HMRC and further support from its shareholders, but that sufficient funding was not available to continue to meet liabilities.
It also mentions a number of legal claims, saying: "Since our appointment, we have been made aware of a number of legal/insurance claims which the company was both defending and pursuing prior to our appointment. the quantum of these claims is significant; in some cases in excess of £1m. We have engaged with several law firms who were advising the Company prior to our appointment with a view to understanding the cost and likely benefit of continuing to pursue these claims. We are exploring these claims and will provide an update in our next report."
A ray of hope came a week after the administration, when Sunderland’s Brims Construction saved around 150 jobs by acquiring Tolent’s Teesside operations – with the firm’s two directors working with their father, the former chairman and founder of Tolent John Wood, to bring some of the collapsed firm’s sites back into action. The deal involved Brims making an immediate payment of £15,000 to acquire all the furniture and equipment located at the base in Cleveland House as well as payments for a short term lease while a long leasehold is organised.
The update adds: “In accordance with the SofA, unsecured creditors totalled approximately £46.7m at the date of appointment. Based on current information, we do not anticipate there will be available funds with which to make a distribution to unsecured creditors."
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