ISG’s administration blamed on problematic pre-Covid contracts, impacting staff and suppliers.
- The firm, led by Zoe Price, filed for administration due to legacy contract losses from 2018-2020.
- Key sectors affected included residential, logistics, and some data centre projects, hitting liquidity.
- Cathexis, ISG’s owner, failed to refinance or secure a sale despite efforts.
- Industry bodies highlight broader issues in construction, citing unsustainable practices.
ISG’s recent collapse has been attributed to loss-making contracts secured prior to the Covid-19 pandemic, a situation publicly acknowledged by its chief executive, Zoe Price. In an email addressed to nearly 3,000 employees, Price noted that the company’s financial health had been severely impacted by problematic projects signed between 2018 and 2020. These contracts, primarily in the residential and logistics sectors, alongside certain data centre initiatives, significantly affected ISG’s liquidity.
In spite of achieving profitability in the current fiscal year, the financial burden posed by these legacy contracts proved insurmountable. Price, who took over as chief executive in February following a long tenure as a company director, expressed profound regret over the company’s situation. She communicated her apologies to both staff and suppliers, advising the latter against attempting site access, although provisions would be made for them to retrieve their equipment.
Attempts to rectify the company’s financial trajectory through refinancing endeavours fell through as ISG’s owner, Cathexis, was unable to execute the necessary recapitalisation. Simultaneously, efforts to negotiate a sale were unsuccessful, with the prospective purchaser, Antipodean Holdings, claiming readiness to finalise a deal which ultimately did not materialise. This situation was described as particularly challenging within the broader construction industry context.
The announcement of ISG’s administration sent ripples throughout its nearly 3,000-strong workforce and a supply chain already under strain. According to Build UK, the incident highlights long-standing systemic issues within the construction sector, particularly concerning the transfer of financial risk and the acceptance of low-profit margins. The organisation emphasised the need for more sustainable and collaborative industry practices.
Reactions from industry peers underscore the magnitude of ISG’s failure. Robert Sanders, chief financial officer at Structura, described the news as dire, highlighting the vulnerability of subcontractors heavily reliant on ISG. Clive Dickin of the National Access & Scaffolding Confederation articulated concerns over the logistical challenges now facing scaffolding companies, describing the situation as a logistical crisis.
The downfall of ISG underscores the critical need for reform in construction industry practices to prevent similar collapses.
