Readie supply chain hit for £24m

Readie Construction’s supply-chain partners will struggle to recoup any of the £24.8m they are owed.

Administrators from Begbies Traynor have warned that hundreds of subcontractors and supply-chain partners will be out of pocket, after the logistics and warehouse specialist collapsed into administration in February.

Some partners will be hit particularly hard, with four being owed more £1m each when the bumper contractor appointed administrators. Four more were owed upwards of £400,000.

In total, subcontractors will miss out on £18.8m worth of funds, with trade creditors facing a £6m gap.

Readie also owed Balfour Beatty’s ground engineering business £948,000 when it collapsed.

More than 160 former employees will receive at least some of what they were owed in holiday pay and unpaid salaries, to the tune of £490,000.

Another £1.2m in undefined compensation will also go unpaid, an issue affecting 158 members of staff, Begbies Traynor said.

The administrators did gather £1m from Readie, mostly from its cash pot. Some additional funds were also gathered by selling off its IT equipment and office furniture.

HMRC, the firm’s second preferential creditor, claimed £8m in a range of unpaid taxes. But it will only receive £450,000 in total.

Readie blamed its demise on inflation, subcontractors falling into administration and tough conditions in the performance bond and trade credit insurance markets.

Readie became an employee ownership trust (EOT) in 2021, and was the third big-name EOT to go under last year, after Buckingham Group and Michael J Lonsdale.

That has led some industry analysts to question the benefits of employee ownership of construction firms, especially given the thin profit margins that characterise the industry.

Chris Davies, managing director of DRS Bond Management, warned in February that EOTs and construction “are not natural bedfellows”, especially if outgoing dividends exceed a company’s retained reserves of cash.

Readie also suffered from a squeezed industrial projects market, after interest spikes knocked investor confidence and weak retail spending affected demand.

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