Many creditors of the Bolton-based contractor are yet to receive a penny, seven months after the company collapsed, with remedial works to completed jobs and loss-making contracts all under the administrators’ spotlight.
Forrest entered administration in December last year after weeks of speculation around its financial health; at the time of its collapse, it owed its unsecured creditors, including consultants, subcontractors, and suppliers £22.7m.
In newly-released documents, administrators FRP Advisory said it been “challenging” to recover funds from Forrest’s construction and housing contracts. The administration said there had been “significant issues” including:
- Invoicing at higher levels than costs incurred following review of the stage of completion of each project;
- Remedial works required to bring each project up to the requisite standard; and
- Losses incurred in completing contracts
According to the company’s books, it was owed £13.5m in debtors and contracts in progress, along with £3.8m in retentions at the time of its collapse. Most of the work-in-progress was in its construction arm, where it had around £9.7m worth of work under way but was only owed £177,000 by its debtors. So far, the administrators have managed to recover £1.25m of this.
Loss-making jobs at the time of the company’s collapse are understood to have included X1 The Plaza in Manchester; X1 The Gateway in Salford; and SYNQ in Manchester’s Northern Quarter.
Despite recovering £1.25m, the administrators said that other than a funding pot of around £600,000, “it is not anticipated there will be sufficient realisations for a distribution to unsecured creditors”, meaning many suppliers will lose sums of up to seven figures.
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
The Greater Manchester Combined Authority had previously loaned Forrest nearly £5m to keep the company afloat; although it initially appeared the GMCA would lose its money, another Forrest backer, Palatine Private Equity, is understood to have provided a guarantee that the £5m would be repaid.
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 SYNQ job in Manchester, with McCarren’s company Domis now on site. Trilandium has also stepped into complete X1 The Gateway in Salford.