The Buckingham Group imploded more than £108m, according to its administrators.
The premier contractor collapsed earlier this month after suffering “significant and widening losses on key sports and leisure contracts due to inflationary pressures,” according to a statement of proposals document written by administrators of Grant Thornton.
Buckingham, which had 669 staff and offices in Stowe, Birmingham, Doncaster, London and Manchester, also suffered “losses”. […] on a key civil/construction project, contract delays and delays in recovering significant balances of work in progress,” the document states.
Grant Thornton said the problems created a cash flow crisis as receipts were received at the end of the month while large payments from subcontractors were due mid-month.
The group owes £108m, with 1,258 claims lodged with the administrator. While most of these claims relate to separate companies, some suppliers have filed multiple claims.
Grant Thornton said it expected the ordinary preferred creditors to be paid in full, and that the payment would also be made to the secondary preferred creditors. However, he said it was “unclear whether there will be a return to unsecured creditors”, adding that it depended “on certain claims and realizations by the debtor”.
Buckingham had £4.8m in a bank account with HSBC, one of its creditors, when it collapsed, although that money has not yet been transferred to the administrator’s account.
The administrator said: “As a result of increasing losses on contracts and a lack of visibility on key cash flow issues such as HM Revenue & Customs (HMRC) Time to Pay [arrangements] (TTP) and contract awards, the advance rate on financing provided through the company’s invoice financing service was reduced to zero in July 2023.
“This, together with HMRC’s rejection of a proposal for another TTP in August 2023 and increased pressure from creditors due to being unable to meet full payment from the supplier/subcontractor, led to that Grant Thornton was engaged by the company on August 16, 2023 to explore a sale of businesses and assets”.
Grant Thornton was unable to sell the business, although it did sell the company’s rail division and related assets to Kier for £9.6m. The book value of the assets sold to Kier was approximately £11m, it said.
Kier paid £5.67m to take over Buckingham’s live rail projects, £1.89m for its HS2 contract and around £333,000 each for retentions, debts and ongoing works.
Kier paid £1 more each for customer contracts; a contract with the West Midlands client; supplier contracts; business intellectual property; goodwill; business records; Information technology; stock; and plant and equipment.
Grant Thornton said before Buckingham’s collapse that it approached “several debt providers, along with a number of special situation funds, private investors and the UK and oversees commercial buyers”.
But he added: “Despite contacting more than 20 parties, no party was willing to provide additional debt financing to the company or was willing to pursue a solvent purchase of the company’s share capital.”
