More than 300 jobs have been lost after the construction company in charge of some major schemes in the north-east of England collapsed into administration.
Gateshead-based Tolent has worked on Riverside Sunderland, the Hadrian’s Tower residential development, and the Milburngate development in Durham.
But last week, the company sent all its employees home and shut down operations.
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The company was awarded a £3 million contract to build the new RNLI headquaters on Cleethorpes beach, but it is reported work on that site has stopped and equipment is being removed.
Interpath Advisory has now confirmed the formation of an administration team, following the group’s financial difficulties.
In addition to its headquarters in Team Valley, the company has offices in Leeds, Shotton Colliery in County Durham, and Teesside Industrial Estate in Stockton-on-Tees.
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The companies collectively employ around 400 people.
Tolent was founded in 1983 and had a first-year turnover of £300,000, with its first deal coming from British Steel, a long-standing client, and the group has been responsible for some of the region’s and beyond’s largest schemes over the years.
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This included the £60 million Sage head office in Gosforth, Newcastle City Library, Wellbar House, and Sunderland’s Beacon of Light.
It did, however, blame a £4 million loss on the collapse of developer High Street Group in its most recent accounts.
The contractor’s group turnover increased by 7 percent to £197.9 million in 2021, the highest since its inception in 1983, but the group recorded a multimillion-pound loss amid what it described as a “perfect storm” of adverse trading conditions.
It stated that the pandemic, a bad debt, a loss-making contract, and the overall macroeconomic environment that has affected the entire sector had all had an impact on its bottom line.
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Tolent has faced numerous challenges, including rising raw material costs, supply chain issues, material and labour shortages, and the failure of several developers, contractors, and supply chain partners.
This meant one of Tolent’s major contracts, the £85.5 million Milburngate development in Durham, became significantly loss-making, putting a strain on the company’s working capital.
Interpath said Tolent’s directors have worked extensively in recent months to explore options to secure the company’s future, but with a solvent solution unable to be secured, they made the difficult decision to place the companies into administration.
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The joint administrators made 313 of the firms’ employees redundant nearly following their appointment.
A total of 91 members of staff have been taken to assist them whilst they explore any likelihood of a sale of the businesses and their assets.
James Lumb, managing director at Interpath Advisory and joint administrator, said: “Tolent is one of the most well-known construction firms in the North East, having been involved in landmark projects including Riverside Sunderland, the Hadrian’s Tower residential scheme and the £85.5m Milburngate development in Durham.
“However, like many businesses across the UK’s building and construction sector, the Group has been battling severe headwinds, including spiralling costs, labour shortages and also the loss of other companies within its supply chain, all of which unfortunately resulted in one of its major contracts becoming loss-making. Following the tapering off of the Government’s Covid support schemes, and in the wake of recent economic volatility, access to finance has tightened for many companies across the sector. This means many building and construction firms are finding they have fewer options available to them to help deal with any liquidity crisis.
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“Additionally, after the annual Christmas shut-downs and a cold December, the months of January and February often bring with them a painful cash crunch. In a sector which typically operates on wafer-thin margins, this can often prove to be insurmountable, and unfortunately, so has been the case for Tolent.”
Tolent’s collapse comes as business experts with rearrangement organisation R3 in the North East warn that the “insolvency dam has burst”, following a number of high-profile company failures.
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In England and Wales, there were 22,109 corporate insolvencies last year, up 57 percent from the year before, according to official records.
Source: Business Live
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