ICSM Insolvency Business News: a round up of some recent casualties including Thames Water’s ‘junk rating’; Government contractor crashes with 2,200 workers made redundant; and logistics firms enter administration

By Harry Mottram: The bigger they are the harder they fall. That’s certainly the case of Thames Water, the once mighty utility privatised in 1989 by the Conservative Government with no debt and now on the brink of collapse with its credit rating reduced to junk. Owing some £15bn in debt it has little or no chance of borrowing its way out of trouble with the most likely outcome being some form of nationalisation. The Government however does not want to inherit that debt with the Chancellor Rachel Reeves trying to cut spending rather than increasing.

Ian Carrotte of ICSM said: “There’s a widely held view in business that when a company gets into trouble it is up to the owners to take responsibility and to sort out the problems rather than crying out for help from the Government. No firm is too big to fail and that includes utilities. If Thames Water goes bust which it effectively is already then the banks and other funders need to take the hit not the tax payers. Suppliers, contractors and workers should be protected while the directors who have brought this sad affair about should be fired.”

 Thames Water is currently in special measures imposed by Ofwat. If it fails to raise new money then the water watchdog and the Government would be likely have to put the utility into a form of renationalisation.

In the world of construction, the firm ISG who holds or rather held many UK Government contracts has entered administration, making 2,200 workers redundant. Creditors will be wondering if they will be paid as its liabilities are unknown – but have been caused by so-called ‘legacy issues’. As the sixth largest firm in the sector it is the largest collapse since Carillion. It is thought Ernst & Young will be appointed as administrators. Another building company has also gone bust this month. Perthshire firm Hadden Construction has entered administration blaming its failure of on rising materials costs and an increase in labour rates. 66 workers have lost their jobs as joint administrators Ben Cairns and Jonny Marston from Alvarez & Marsal were appointed to sort out the affairs of the collapsed company.

Related to the construction sector the stone firm Levantina (UK) Limited based in Basingstoke has collapsed owing several million pounds to creditors. Administrators of Interpath Advisory are Nick Holloway and Stephen Absolom hope to refloat the firm and retain the staff.

Logistics outfit Sunspeed Transport Services have also entered administration in August with FRP Advisory taking control after its demise was blamed on cash flow problems. Motor Transport reported: "The company, which holds an international operator licence for 20 HGVs running out of two bases in Farnborough and Bracknell and undertakes work for Disney, Amazon and Oracle, markets itself as supporting ‘the entire physical IT lifecycle’”.

Chris Tindall of Motor Transport also reported on Alton-based PL Transport Logistics hitting the buffers. He reported that the ‘Hampshire haulage firm had entered administration following a breach in the terms of its company voluntary arrangement (CVA).’

He penned: “PL Transport Logistics was around six months into a five-year agreement, which initially involved making monthly payments of £5,000, when the CVA supervisor was informed by HM Revenue and Customs it had liabilities outstanding.”

He continued: “Office of the traffic commissioner records showed that it was called to a public inquiry in August for consideration of disciplinary action, but that no action was taken and the TC accepted the surrender of its licence instead. Its last set of accounts showed that while money owed within one year to creditors had fallen from £187,000 in 2022 to £39,000 last year, its VAT bill had ballooned from £75,000 to £452,000.”

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