GB Building had debts of £110m when it collapsed
THE construction group which was building the new Hilton Hotel in Leeds city centre had total debts of £110m when it collapsed in March.
384 jobs were lost after GB Group Holdings and its subsidiary GB Building Solutions were forced to abandon its sites when it ran out of cash.
Its directors had been trying to plug a working capital gap of between £6m and £10m, after using up its £6m overdraft.
A report by administrators Tony Nygate and Graham Newton of BDO sets out the scale and breadth of the group’s difficulties and concludes that unsecured creditors won’t receive any payments.
They highlighted three principal causes of the group’s collapse – costs from rectification works on legacy contracts and the difficulties in recovering those costs from sub-contractors, delays in payments being received, and developments not being completed which meant investments were still unrealised.
Its five largest claims against sub-contractors, and their insurance policies, are estimated to be worth up to £11m. Two of those projects – at Manchester Metropolitan University and Kings College London – are blamed by management for causing the working capital issues that led to the group’s collapse.
It was also owed £9.5m from completed contracts but at the date of the report – April 29 – just £58,000 had been collected by administrators and they said they “anticipate that the collection process will be lengthy”.
GB Group Holdings had unsecured creditors of £33.6m and GB Building Solutions owed £76.7m, although this includes intercompany balance and amounts due under cross indemnities.
