Scottish firms out of pocket after collapse of construction contractor

Dozens of Scottish firms are set to be left out of pocket by the collapse of a construction industry contractor which owed almost £2 million to suppliers when it went under.

The shutdown of construction sites during lockdown added to the firm's cashflow woes.

Administrators were appointed at mechanical and electrical specialist Weir & McQuiston (Scotland) in November and the 93 staff made redundant.

The family-run firm was founded in Wishaw, North Lanarkshire, in 1976 with just three employees and the workforce peaked at more than 200 in 2019.

Very tight margins in the construction industry, issues caused by the shutdown of construction during the pandemic and problems with labour and materials shortages were all blamed for its demise.

A report filed by administrators from Azets also said main contractors had not been willing to work together in getting a compromise over project costs.

The update report shows estimated unsecured creditor claims may amount to around £4.3m, including just under £2m owed to trade creditors, although the final figure could reduce depending on the level of debts recovered and amounts raised from work in progress.

A firm has been appointed to recover outstanding money owed but the administrators said a significant amount of work is needed to finalise accounts on work in progress. It is likely to be up to two years or longer before the debt collection process can be completed.

More than 130 suppliers are owed money by the firm, including local van hire firms, skip suppliers and cleaning contractors.

The 93 former staff have submitted claims to the Redundancy Payments Office totalling £139,000. HM Revenue and Customs has also submitted a claim for £1.34m for money owed in tax and VAT.

At the time the firm’s collapse was announced joint administrator Blair Milne described Weir & McQuiston as one of Scotland's leading mechanical and electrical contracting firms with a quality client base and an excellent reputation across the construction industry.

“The directors did everything possible to keep the business trading, however, the scale of cashflow problems and the impact of the lockdown left them with no alternative other than to cease trading and place the company into administration,” he said.

Latest figures show the number of corporate insolvencies seen across Scotland rose by 40 per cent in the third quarter of 2021, as inflation and supply-chain pressures started to bite and government Covid-19 support measures began to unwind.

Analysis of notices in The Gazette by Interpath Advisory reveals that a total of 14 companies fell into administration or receivership from July to September 2021 – up from ten in Q2 2021, and also up on the ten appointments seen during the same period last year.

This upward trend mirrors the national picture, which saw UK administrations and receiverships increase by 26 per cent in the third quarter of 2021 - from 123 in Q2 2021 to 155 in Q3.

Across the UK, the construction and energy sectors saw the largest rise in levels of administrations and receiverships in Q3 2021, with three times as many filings for insolvency in the energy sector (nine appointments) and twice as many filings in the construction sector (34 appointments) compared to the previous quarter.

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