Henry Construction Projects had only £290,000 in cash when it collapsed, despite owing £43m to suppliers.
The Hounslow-headquartered company turned over £402.2m in its last reported financial year, working on groundworks and concrete frames as well as major residential developments. However, it collapsed in June, leaving 60 half-finished projects and creating around 90 job losses.
A new document published by Henry’s joint administrators, Matthew Reay and Geoffrey Rowley of FRP Advisory, said Henry’s “business model was to enter into fixed-price construction contracts which were keenly priced to give them a competitive edge”.
The duo pointed out that the company had expanded rapidly since incorporation in 2010 – rising to 41 on the CN100 2022 – with “the company’s low prices attracting substantial business”. But they added that it ran into problems with the double-digit construction inflation seen in 2021 and 2022.
The administrators said the beginning of the end was the serving of a winding-up petition on 31 May by Ozel Group, which was owed £283,000. A winding-up petition is a formal application to have a company declared insolvent and wound-up, in a bid to receive outstanding payment.
The joint administrators said the petition was “widely advertised” and caused “extreme difficulties” as Henry’s subcontractors approached developers to demand payment for continuing to work and the firm’s debtors stopped making payments that were due.
In total, Henry owed more than a hundred suppliers and subcontractors a combined £43.4m – with eight companies owed more than £1m. However, the joint administrators said they did not expect to return any money to any unsecured creditors.
The joint administrators noted that while Henry had “significant plant and machinery assets”, a register of the plant was “deficient” with a “significant amount of the plant… not at the expected locations”.
They added: “Several of the landowners have reported that plant and machinery was being removed from the project sites in the days leading up to the [administrators’] appointment.”
The companies that are owed more than £1m are OH Piling (owed £6m), PHD Modular Access Services (£2.9m), Capital Reinforcing (£2.4m), CCF Ltd (£1.8m), O’Malley Haulage (£1.6m), SIG (£1.2m), Lords Builders Merchants Holdings (£1.1m) and London Concrete (£1.1m).
Henry employed 54 staff directly before it went under, as well as a further 41 subcontracted quantity surveyors and site managers.