Connaught owes builders merchants £57m

Collapsed social housing giant Connaught could owe unsecured creditors as much as £100m, with half of that to trade creditors like PTS, Travis Perkins and Jewson.

Administrators KPMG found 50,000 invoices which had not been accounted for by the maintenance specialist.

David Costley-Wood, joint administrator and restructuring partner at KPMG, told the Financial Times: “We were surprised at the level of backlog of invoices that had not been processed for a listed company.”

Because there is only £600,000 in cash available for unsecured creditors, they are likely to receive less than a penny in the pound.

The creditors report, obtained by the Financial Times, said employee records held centrally “proved to be unreliable and in a poor state”.

“Relative to its size, it’s one of the worst payroll records I’ve seen in 20 years. The scale of the problem and the company’s debts was greater than had been expected.”

The debt level was previously thought to be £46m to unsecured creditors, on top of £21.7m owed to HMRC. It is still unclear how much secured lenders – collectively owed £215m and which also include private placement noteholders – are likely to recover.

Former chief executive Mark Tincknell is owed £28,708, while finance director Stephen Hill is owed £23,799.

Connaught warned in June that Government spending cuts would hit revenues. Some 1,400 employees were made redundant when KPMG were brought in – though 4,200 jobs were originally at risk.

About Fiona Russell-Horne

Group Managing Editor across the BMJ portfolio.

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