Forrest creditors set to lose £28m
Bolton-based contractor Forrest owed its subcontractors and suppliers more than £28m when it collapsed in December last year, with some firms owed more than £1m each, according to a newly-released administrators’ report.
The business, which called in administrators on 7 December last year after months of financial difficulties, owes its unsecured creditors £22.7m, with some owed more than £1m each, according to administrators FRP Advisory.
Other than a small potential distribution from a pot of £235,000, it is unlikely any of these companies will receive a penny of what they are owed.
Among the companies owed more than half a million pounds at the time of the company’s collapse were:
- Blackpool-based building services engineer Ameon, owed £1.1m
- Groundwork contractor O’Halloran & O’Brien, owed £1.1m
- Sale-based M&E contractor Proline, owed £1m
- Evander Glazing and Locks, owed £767,300
- TW Fabrication Structures, based in Preston, owed £569,000
- Concrete frame contractor Heyrod, based in Oldham, owed £549,000
- Bury-based Complete Wall Solution, owned £545,000
Proline, which worked on two of the company’s problem jobs at X1 The Gateway and X1 The Plaza, has since followed Forrest into administration. Its most recent full-year accounts show it was profitable in the 12 months to 30 September 2017.
Other unsecured creditors include HMRC, owed £600,000, and the Greater Manchester Pension Fund, owed £4.9m. Unlike other creditors, the GMPF is likely to recover what it is owed, due to a guarantee put in place by one of Forrest’s backers, Palatine Private Equity.
Forrest’s secured creditors, including its main lenders Santander, owed £10.7m, Palatine Private Equity, owed £3.9m, and the Greater Manchester Combined Authority, which is owed £2m, are also likely to lose out.
The Greater Manchester Authority’s £2m loan to the company was agreed in 2017 and was intended to keep Forrest afloat.
The report also reveals further details of how the company, which was working on major projects in both Manchester and Liverpool, ended up calling in administrators.
FRP was engaged by Forrest on 30 October due to the company’s financial difficulties; soon after the appointment FRP said “it became immediately apparent that the short-term cash flow forecast showed a deteriorating cash flow position and an injection of funds or immediate sale process was necessary”.
This caused the administrators to purse an “accelerated sales process”, putting the business up for sale. Of the 23 parties initially contacted over the sale, seven signed non-disclosure agreements to make a potential offer for the company.
Ultimately, some of Forrest’s social housing and energy contracts were sold to Engie for £1.3m, saving around 64 jobs.
According to the administrators, draft accounts for Forrest’s full financial year for 2018 showed a turnover of £74.9m and a pre-tax loss of £6.6m. This loss would have built on a full-year pre-tax loss of £6.6m on a turnover of £82.6m for 2017.
Forrest originally itself in difficulty after it unearthed a pre-tax loss of £26m in 2016, which it said was down to accounting “errors”.
The company had previously reported a pre-tax profit of £3.6m in 2015 but this was revised heavily downwards to a pre-tax loss of £19.2m. This was followed by a £6.8m loss for the year to 29 February 2016.
Mark Nicholson, Carillion’s former managing director of building for the North, Midlands, South West, and Scotland, took over as chief executive in September 2017, following the exit of former boss Lee McCarren, who went on to set up contractor Domis.
Forrest’s former finance director, Matthew Farrimond, was also jailed this summer for siphoning off nearly £370,000 from the company during his time in charge.
He was jailed for four years at a Bolton Crown Court hearing in June last year.
Since its collapse, Forrest has been replaced on a number of its major jobs, including Elliot Group’s £100m Aura residential project in Liverpool, where Vermont has taken over.
Elliot Group has also drafted in concrete frame contractor Careys to continue work on The Residence in Salford, a £70m, 34-storey residential development.
Developer Salboy also acted quickly to replace Forrest on the contractor’s loss-making Citu NQ job in Manchester, with McCarren’s company Domis now on site.
Last summer, Nicholson set up two firms at Companies House: Forrest Construct and Forrest Services, alongside Forrest financial director Keith Reid. However, according to Companies House documents, Nicholson is now the sole director of these companies after Reid resigned as a director this month. Reid has gone on to set up a company named Windmill Advisory, which was incorporated in December 2018.