ICSM Insolvency Business News: Harland & Wolff enters administration as non-core workers sacked and non-core businesses dumped

By Harry Mottram: Administrators have been lined up to seek a rescue deal for famed Belfast ship-builders Harland & Wolff after it failed to meet its financial obligations. The company known for its role in constructing the SS Titanic has a number of yards including Appledore in England and Methil and Arnish in Scotland. Plus the firm has several non-core businesses which it is in the process of dumping along with the staff and debts. There’s a ferry service in the Scilly Isles, a small company in the United States and a marine services company in the UK – all of which will be disposed of by sale or closure.

Its four shipyards will remain operational as administrators seek what is being described as ‘a credible pathway’ by administrators Teneo for new owners to take charge of the historic manufacturer from current owners Infra who bought the company out of administration in 2018 from Fred Olsen and Co. John Campbell of the BBC reported: “The company said the administration process would be confined to the holding company, Harland & Wolff Group Holdings plc, and the operational companies which run the yards are expected to continue trading. However, shareholders will see the value of their investments in the business entirely wiped out.”

There’s considerable disquiet in the sector over two aspects of the firms finances in recent times with the small matter of £25 million pounds which has been alleged to have been misused with an investigation by PwC and law firm Simmons and Simmons into the alleged "misapplication" of funds under previous management. The former CEO John Woods who was forced to quit has denied any wrongdoing.

A second matter is the previous Tory Government’s offer to guarantee £200 million pounds towards paying off the ship builder’s debts – that was quickly blocked by the incoming Labour administration for fear of wasting taxpayers’ money with no change of management. Reuters are reporting that several companies are interested in buying the ailing business – mainly due to a number of lucrative contracts and ongoing work at the yards which suggest the famous name will survive.

Worldwide ship building was badly hit by Covid with many yards closed for months while this year the USA has seen something of a crisis in the industry and in Germany this month the Saxony federal Government has taken a 40% stake in shipbuilder Meyer Werft to prevent is collapse.

Ian Carrotte of ICSM said the largest concern amongst suppliers to shipyards is the huge knock-on effect the closure of a big yard can have on the local economy. He said: “In Belfast there are over 1,000 workers on the pay roll whose loss of income would hit all the local businesses immediately. Then the yard relies on a vast number of supporting companies from transport, steel suppliers, tools and a supply chain as long as your arm. Fears they won’t get paid under a restructuring or sale is uppermost in the minds of suppliers and those who supply the firm that built the Titanic are particularly vulnerable.”

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