Michael J Lonsdale supply chain unlikely to see £65m owed

Less than £600,000 of the £120m owed by collapsed mechanical and electrical (M&E) contractor Michael J Lonsdale, including the £65m owed to trade creditors, is likely to be paid out.

In an administration progress update, the company’s administrator, Begbies Traynor, said the assumption was that there would not be enough to pay unsecured creditors or secondary preferential creditors.

Alongside the £65m owed to its supply chain, Michael J Lonsdale owed £50m to connected business Michael Lonsdale Ltd, £1.7m to HMRC and £3.5m to employees.

Staff are likely to receive £586,000 in pay arrears and holiday pay, although this has not yet been paid out, the report said. The remaining £2.9m owed is unlikely to be recovered.

Royal London Mutual Insurance Society, the landlord of Lonsdale’s Berkshire office, is the company’s only secured creditor. While Lonsdale’s debt to its landlord is still unknown, Royal London may use the £46,000 rent deposit paid in 2005 to settle unpaid rent or dilapidation charges.

Michael J Lonsdale fell into administration last October. Construction News revealed the following month that it had been pushed over the edge by a declining credit rating after inflation on the cost of building materials – caused by the full-scale Russian invasion of Ukraine – led to project delays.

“The company faced a new hurdle in 2023 as credit ratings started to decline, placing strain on its cash reserves, [and] insurers drastically reduced its credit ratings in August 2023,” Begbies Traynor said in its initial report.

Michael J Lonsdale was one of the UK’s largest M&E specialists and the 77th biggest contractor in the UK, according to the CN100 2023 ranking. In recent years, the firm worked on major construction projects including 100 Bishopsgate and Battersea Power Station, both in London.

The firm was sold to an employee-owned trust in February 2020.

>>> Read full article>>>
Copyright for syndicated content belongs to the linked Source : ConstructionNews – https://www.constructionnews.co.uk/financial/administrations/michel-j-lonsdale-supply-chain-unlikely-to-see-65m-owed-13-05-2024/