Pn 20th September 2024 Timothy Graham Vance, Alan Michael Hudson and Dan Edkins of EY-Parthenon were appointed as joint administrators to eight UK trading entities of ISG: ISG Central Services Limited, ISG Interior Services Group UK Limited, ISG Fit Out Limited, ISG Engineering Services Limited, ISG UK Retail Limited, ISG Retail Limited, ISG Construction Limited and ISG Jackson Limited.
Just 200 of ISG’s 2,400 staff have been retained by the administrators to help wind down the business. The rest have been let go.
EY-Parthenon said that ISG’s UK business had experienced liquidity constraints in recent months. The directors explored a number of options to secure the future of the business, including a sale of all or part of the group and refinancing options but failed to complete a deal.
The administrators said: “Whilst there has been misleading speculation surrounding the potential sale in the last few days, we wish to be clear to employees, suppliers, and customers that it was not possible to conclude a sale as the potential purchaser could not, despite repeated requests of them to do so, adequately demonstrate that they had the funding needed to recapitalise the business and keep it solvent.
“Due to current market conditions, an alternative sale or additional funding could not be secured. As a result, the directors made an application to court to place certain UK trading entities of ISG in administration.”
According to Tussell, which monitors government contracts, ISG has 22 live contracts with the public sector worth £1.15bn. The most valuable is a £518m Ministry of Defence contract under the Defence Estate Optimisation Portfolio – SLA & Technical Infrastructure Programme.
ISG has nine live contracts with the Ministry of Justice, worth a combined £422m. The largest of these is for four new prisons, worth £300m to the company.
On the morning that the news broke, the Construction Leadership Council (CLC) convened a meeting between key construction trade bodies, education and skills providers and the Department for Business & Trade to discuss how industry should respond to ISG filing a notice to enter administration.
The CLC is collating guidance for those impacted. “We would advise everyone in the industry to ensure that they are managing any impact on their businesses within the terms of existing contracts, ensure that where possible payments are made promptly to suppliers and to await further information,” the CLC said. “If companies are in particular financial distress, we would encourage them to contact their relevant industry body.”
Build UK and the CITB have established a working group to find new placements for ISG apprentices and graduates.
Rebecca Dacre, partner at audit, tax and advisory firm Forvis Mazars, says: “17 construction companies are now going insolvent every working day. This is an extremely tough period for the industry.
“Contractors have traditionally had to operate on very thin margins, even when the economy is booming. When the economy struggles, it’s often construction companies that get hit the hardest. That’s what has happened over the past year.
“Borrowing costs are beginning to fall significantly but need to come down more for this sector to recover.”
