Tue, 14 Feb 2023 | ADMINISTRATION
A buyer is being sought for the business and assets of Gateshead construction firm Tolent after it fell into administration. James Lumb and Howard Smith of Interpath Advisory were appointed as joint administrators to Tolent Plc and five subsidiaries on February 13.
Despite reporting turnover of £197.9 million in 2021, the highest since its founding in 1983, Tolent fell to a £4 million loss, which it partly blamed on the collapse of development firm High Street Group, as well as a “perfect storm” of trading headwinds.
The company was impacted by the ongoing fallout from COVID-19, a loss-making contract, bad debt and the wider adverse trading conditions affecting the UK’s construction sector, including rising costs for raw materials, labour and materials shortages, supply chain disruption and the collapse of other firms across supply chains.
One of the company’s major contracts, the £85.5 million Milburngate development in Durham, had become significantly loss-making, taking a major toll on its working capital. The directors undertook extensive work to find a solution to safeguard the company’s future, but ultimately made the decision to call in administrators.
The administrators will now explore a sale of the businesses and their assets. 313 employees were made redundant upon their appointment, with 91 members of staff retained to assist administrators. Joint administrator and Interpath managing director James Lumb said the administrators’ priority would be to "work with key stakeholders to assess options for each of the companies, including options for ongoing contracts and live projects".
Lumb added: "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."
"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."
Founded in 1983, the company grew to become one of the North East’s most prominent contractors, working on major schemes in the region, including Newcastle City Library, Sunderland’s Beacon of Light, the Sage head office in Gosforth and Wellbar House.
Along with Durham’s Milburngate development, Tolent had also been working on the Hadrian’s Tower residential scheme and Riverside Sunderland, while it had recently won the £3 million contract to build the new RNLI headquarters in Cleethorpes.
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