Goodwin’s owed £2.9m as it fell into administration
Cashflow issues stemming from a contract dispute at the end of 2019, compounded by the impact of the Covid-19 pandemic, resulted in the Manchester-based construction firm appointing FRP Advisory as administrators last month.
The company owes around £2.9m to creditors, according to the administrators’ first report:
- £1.3m to suppliers and subcontractors
- £700,000 to Barclays
- £120,000 to employees
- £784,000 to HM Revenue & Customs
The company is expected to realise £360,000 from the sale of assets, the recovery of inter-company debts and the repayment of the director’s loan account, according to the administrator.
Lyceum Manchester, the special purpose vehicle delivering an 82-bedroom apartment scheme in Eccles, was also placed into administration last month owing £30,000 to Goodwin’s.
Employees owed £23,000 in wages and pension contributions are expected to be paid in full whereas unsecured creditors are anticipated to receive payment of 1p in the pound, according to the report.
Barclays is also unlikely to be repaid in full. The shortfall will not be known until later in the administration process.
The company in administration, Goodwin’s Construction Services Group, is a subsidiary of Goodwin Construction Group Holdings, which is in turn wholly owned by the Goodwin Group, neither of which are in administration.
For the 12 months ended 30 June 2019, Goodwin’s Construction Services Group reported revenues of £10m and a profit of £750,000.
A contract dispute towards the end of last year resulted in the loss of between £3m and £4m future revenue, FRP’s report states.
Despite the loss of the contract, subcontractors and suppliers had to be paid in full, resulting in cashflow issues.
Goodwin’s and the client agreed a £500,000 settlement, of which £200,000 is outstanding.
In March, the company furloughed 25 of its 30 staff and its construction sites closed for between four to six weeks. At this time, a contract worth £2.2m in Manchester city centre was lost, according to the report.
In an attempt to stay afloat and resolve its cash issues, Goodwin’s applied for a £1.35m loan from Barclays in accordance with the Covid Business Interruption Loan Scheme.
Subsequently, the firm received a loan of £700,000 at the end of June but was unable to secure the additional £650,000 required.
“Due to the continuing effects on the market due to Covid-19, the company suffered cashflow difficulties in excess of those initially anticipated when the CBILS loan was requested,” the administrators’ report said.
Goodwin’s director Richard Goodwin informed administrators that, when lockdown hit, the firm was in talks with developers over contracts worth £15m but, due to the developers’ inability to access funding as a result of the pandemic, the contracts were put on hold.
Prior to being appointed as administrator, FRP was instructed to market the company for sale but, despite interest from 20 parties, a buyer could not be found.
The joint administrators are Yasmin Bhikha, John Lowe and Anthony Collier.
FRP was contacted for comment.