A historic cladding firm recently faced collapse due to unresolved financial and legal pressures. This situation was exacerbated by a substantial claim related to work completed over a decade prior. The firm struggled with additional challenges arising from economic and operational hurdles. Efforts to manage these obstacles proved ineffective, culminated in an unavoidable insolvency. A detailed account of these events is provided below.
The M Price Group, a distinguished cladding firm with origins tracing back to 1881, encountered a significant setback as it filed for administration amidst escalating financial struggles. A report from Seneca IP cited a multimillion-pound claim initiated by Barratt Homes for allegedly defective cladding work done over eleven years ago as the final blow to the company. These alleged defects pertained to the design and installation of work, notably involving unsafe insulation practices, which were highlighted in the adjudication that Barratt Homes pursued successfully.
Initial signs of financial instability for M Price Group became apparent during the Covid pandemic, when its subsidiary, M Price Services Ltd, faced difficulties repaying a £3.5 million Coronavirus Business Interruption Loan Scheme (CBILS) received in September 2020. Although the firm managed to meet the first repayment deadline for a £2 million instalment in September 2021, the relentless pressure of rising material costs, which soared by 200 percent, combined with labour shortages inflating costs by 30 percent, eroded financial stability further.
The cumulative impact of these economic challenges resulted in M Price Group incurring an additional £8 million in costs on contracts valued at £60 million. These financial burdens, coupled with the necessity to repay the £2 million loan, severely impaired the firm’s ability to remunerate suppliers, prompting unsuccessful attempts to secure supplementary payments from clients. As financial woes mounted, credit insurers reacted by retracting insured supplier credit facilities, leading to an operational environment characterised by minimal credit availability.
In a bid to sustain operations, M Price Ltd, the central entity of the group, sought a corporate voluntary arrangement (CVA) to extend its debt repayments. However, the success of Barratt Homes’ claim undermined these efforts, particularly when the firm’s insurer refused to provide coverage in light of the claim’s outcome. The absence of this insurance coverage rendered the CVA impractical, obligating the company to enter administration. The domino effect saw other entities within the group similarly entering administration or liquidation, effectively ceasing all trading activities under the parent company’s umbrella.
Despite the bleak financial outlook, investigations by Seneca IP into M Price Group’s subsidiary transactions remain in the nascent stages, with hopes to possibly uncover capital to address debts related to employee wages and holiday pay. However, the group’s directors have yet to furnish a precise summary of its estimated financial state, making any creditor returns speculative at this stage.
The culmination of financial mismanagement and longstanding legal battles ultimately led to the downfall of this historic firm.
