More than 300 jobs have been lost after the Tyneside construction company behind landmark North East schemes appointed administrators.
Gateshead construction company Tolent has been involved in Riverside Sunderland, the Hadrian’s Tower residential scheme and the Milburngate development in Durham, but last Friday the firm sent home staff and closed down its sites. It was awarded the £3million contract to build the new RNLI headquarters on the beach at Cleethorpes but there have been reports that work on site has stopped and equipment is being removed.
Now Interpath Advisory has confirmed that a team has been appointed, after the group tumbled into financial difficulties. Alongside its head office on the Team Valley, the company also has bases in Leeds, Shotton Colliery, County Durham, and Teesside Industrial Estate, Stockton-on-Tees. James Lumb and Howard Smith from Interpath Advisory were appointed as joint administrators to Tolent plc and five of its operating subsidiaries today, Monday February 13. Collectively, the companies employ circa 400 people.
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Tolent was founded in 1983 and totted up first year turnover of £300,000, with its first deal coming from British Steel, a long-standing client, and over the years the group has been responsible for some of the biggest schemes in the region and beyond, including the £60m Sage head office in Gosforth, Newcastle City Library, Wellbar House and the Beacon of Light in Sunderland.
However, it used its most recent accounts to blame a £4m loss partly on the collapse of developer High Street Group. The contractor saw a 7% increase in group turnover to £197.9m in 2021, the highest since its launch in 1983, but the group recorded the multimillion-pound loss amid what it described as “ a perfect storm” of adverse trading conditions.
It said its bottom line had been affected by impacts of the pandemic, a bad debt, a loss-making contract and the overall macro-economic environment which has been affecting the whole sector.
Administrators said that, over recent years and in common with many businesses operating across the building and construction sector, Tolent has faced significant challenges including the rising costs of raw materials, supply chain issues, material and labour shortages, and the collapse of a number of developers, contractors and supply chain partners.
Against this difficult backdrop, one of Tolent’s major contracts – the £85.5m Milburngate development in Durham – became significantly loss-making, which had a profound impact on the companies’ working capital.
Interpath said that in recent months the directors have worked extensively to explore options to safeguard the future of the business, but with a solvent solution unable to be secured, they took the difficult decision to place the companies into administration.
The joint administrators made 313 of the firms’ employees redundant immediately following their appointment. A total of 91 members of staff have been retained to assist them whilst they explore any possibility 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 suppy 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.
“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.”
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Mr Lumb continued: “Our priority in the coming days is to work with key stakeholders to assess options for each of the Companies, including options for ongoing contracts and live projects. We will also be providing support to those employees who have been impacted by redundancy, including providing them with the guidance and information they need to be able to make claims from the Redundancy Payments Office.”
Tolent’s collapse comes as business experts with restructuring organisation R3 in the North East warn that the “insolvency dam has burst”, following a number of high profile company failures.
Official statistics showed there were 22,109 corporate insolvencies in England and Wales last year, a 57% rise on the previous year. Last week saw long-established Gateshead fair trade company Traidcraft go out of business while Killingworth firm Metnor Construction has also filed notice of going into administration. Figures from the Insolvency Service statistics show that the number of firms put into liquidation through Creditors’ Voluntary Liquidations has reached its highest level in more than 60 years.
A spokesperson for the Milburngate development in Durham said: “The current building work at the Milburngate is very near to completion. The sad news that Tolent has entered administration will not impact on the project. The joint venture developers will continue the final stages of phase one by engaging directly with sub-contractors and relevant Tolent staff to ensure a timely end to construction work.”
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