The Cheshire-based company’s unsecured creditors are owed £70m, while more details behind the firm’s problem jobs have been revealed in a newly released administrators’ report.
Pochin’s and its subsidiaries entered administration in early August with the company blaming “legacy issues” from several problem jobs, and all its staff have now been made redundant.
Administrators at Grant Thornton have now revealed further details around the company’s collapse, including the scale of losses arising from problem construction contracts, understood to include DeTrafford’s City Gardens in Manchester.
The administrators blamed four separate contracts for the collapse, which they did not name, but between them racked up losses of at least £17m across Pochin’s Construction and the company’s residential arm.
These losses were “exacerbated by supply chain failure and shortfalls in the recovery of contractual entitlements”, the report said. It is understood that the company was in a dispute with architect Ollier Smurthwaite and the developer over City Gardens, which was running significantly behind schedule.
The construction arm had posted a £6.2m loss after tax on a turnover of £50.5m, according to its most recent accounts for the year ending 28 February 2018.
Shortly before the collapse this year, Pochin’s directors Jim Nicholson and Bob Nicholson injected £1.5m into the company in July, in an attempt to provide working capital to keep the construction and residential arms afloat.
Other attempts had been made to rationalise the construction arm and securing bridging finance, but the latter was unsuccessful, according to the report. The company also failed to secure a number of tenders it had bid for, leading the directors to call in administrators on 31 July 2019.
At the time of its collapse, Pochin’s parent company owed unsecured creditors £69.8m, with these likely to receive 1p for every pound owed.
These are primarily inter-company creditors, which are owed £13.8m, while Pochin’s also provided cross-guarantees for live construction contracts, totalling £21m. There also bond liabilities of £8.8m, while the company also has a pension deficit of £25m.
While the directors have not yet provided a full statement of affairs for the business, other major creditors set to lose money include Tokio Marine, owed £5m, and Aviva Insurance, which is owed £3.8m. Property companies owed money by Pochin’s parent company include Legat Owen and Knight Frank.
Before entering administration, Pochin’s put its 250,000 sq ft Cheshire investment property portfolio on the market with a price tag of £14m, but attempts to find a buyer were unsuccessful.
Grant Thornton has instructed Christopher Dee, Northwood, and Avison Young to sell a series of sites and assets, with a number of these now under offer. Two sales have also completed at Brooks Lane in Middlewich for a total of £250,000, with realisations from the sale distributed to NatWest, one of the company’s preferential creditors.
Pochin’s was founded in 1935 and was listed on the London Stock Exchange in 1973, before being taken private in 2014.
The company had a series of joint ventures, including in Middlewich where it had partnered with DB Symmetry, now Tritax Symmetry, at the Ma6nitude logistics park.
Pochin’s had also worked alongside Goodman on development at the former RAF Sealand in Deeside, a project which the company has been bringing forward since before the recession. Both of these are understood to be unaffected by the administration process.