In the wake of ISG’s financial collapse, significant financial losses have emerged, affecting former employees and creditors.
- Administrators reveal that ISG’s former employees are collectively owed over £72 million, highlighting the scale of financial mismanagement.
- The company owes £54.4 million to HMRC, and its trade creditors are facing a massive debt of £195 million.
- ISG’s failure stems from an unsuccessful attempt to sell the business after turning over £2.2 billion in 2022.
- The repercussions extend to the supply chain, with numerous firms owed significant amounts, casting doubt on potential recoveries.
In a turn of events that underscores the financial turmoil within the construction industry, ISG’s administration has unveiled that former employees are owed at least £72.3 million. The indebtedness arises from wages, holiday pay, and other unsecured claims. An administrator’s report highlights that the company has £3.8 million to distribute as preferential creditors and a staggering £68.5 million in unsecured claims. The preferential creditors, who retained their roles for a fortnight post-administration, are entitled to back wages and holiday pay within statutory limits. However, asset sales are unlikely to meet these claims entirely, leading them to rely on the government’s Redundancy Payment Service.
Furthermore, while the statements of affairs revealed that HMRC is owed £54.4 million, they also detailed the vast sums owed to trade creditors amounting to £195 million. Among these, 27 companies are owed sums exceeding £1 million each, highlighting the extensive financial connections ISG had cultivated. One notable entity, Michael J Lonsdale, now in administration itself, attributed its financial distress to contracts with ISG—further illustrating the ripple effects of ISG’s collapse. Specifically, ISG Engineering owed them £1.1 million, with an additional £123,000 by ISG Construction.
ISG’s considerable financial activity, with over 3,000 staff and a monthly wage bill of £22.1 million, starkly contrasts with its eventual downfall. The company’s turnover in 2022 was £2.2 billion, with a pre-tax profit of £11.5 million recorded. Despite these figures, ISG’s efforts to find a buyer ultimately failed, precipitating its collapse. This resulted in a pronounced impact across its supply chain network, with £190 million identified in supply chain losses following the administration’s investigations.
The extent of the financial shortfall is exacerbated by uncertainties surrounding ISG Fit Out’s debt and potential new supply chain claims. The situation remains dynamic, and further revelations could increase the already considerable liabilities. The comprehensive scale of ISG’s financial commitments and the associated fallout serve as a potent reminder of the volatile nature of the construction sector.
ISG’s collapse exemplifies the potential volatility and widespread repercussions within the construction industry.
