Bone Steel was put into receivership this week after administrators KPMG rejected a proposal to carry on trading.
Construction News understands that the management team had wanted to continue trading through the administration process but the request was rejected, with all but five employees made redundant last Thursday.
Mr Blair Nimmo and Mr Gary Fraser of KPMG were appointed joint receivers after the company was hit by steel prices going up and payment terms from main contractors lengthening.
It is understood that the company’s legacy debt proved too much for Bone, with recent contract wins, a healthy order book and restructuring plans not enough to convince creditors that it had a viable plan for carrying on.
Bone’s most recent accounts showed debts of almost GBP 3 million, with a new bank loan of GBP 1.6 million taken on and almost GBP 400,000 of cash going out as a result of its operating activities.
It was unclear whether the firm’s bank, state owned RBS, was responsible for all of Bone’s debt. The business was family owned and had a history dating back more than 70 years. Bone had been working in the education market on some Building Schools for the Future projects and academies, as well as in prisons. A well placed source said its biggest clients were Carillion and Miller Group.
Mr Chris Bone former CEO of Bone Steel said that "Demand for structural steel declined by more than 50% in the last 18 months, while challenging conditions in the construction market continued to depress margins and induce project delays out of the company's control. Despite a healthy order intake earlier in the year, contract slippages, volume reductions and supplier credit restrictions combined to make trading extremely difficult."
After 113 people were made redundant last Thursday, the only people left were quantity surveyors dealing with the order book, an accountant responsible for payroll, someone to answer the phones and another to look after the building.
KPMG, meanwhile, was left looking to find steel firms to take on the contracts, with some speculation suggesting Severfield-Reeve was likely to take advantage.
(Sourced from www.cnplus.co.uk)
