£17m loss on housing contracts sparked Pochin’s administration
Pochin's has a long history, shown here in the 1950s
A disastrous quartet of residential building contracts for a single client cost 84-year-old contractor Pochin’s £17m and pushed it towards collapse, new documents from administrators have revealed.
The company went into administration owing a total of £89m to unsecured creditors, who are likely to receive only 0.4p in the pound.
Administrator Grant Thornton detailed how the £60m-turnover company, founded in 1935, hit a challenging period after it entered into four problematic residential building contracts with one client, the first of which started in 2015.
All four contracts suffered from design issues which led to significant delays and there was also a failure in the supply chain resulting in losses across the four contracts of £17m.
Pochin’s incurred further costs when it tried to pursue claims and settlements against its client. A new management team was then drafted in in 2018 in order to try and turn the business around. The company set out a new strategy of winning new, profitable contracts as well as trying to reach reasonable settlements on the troubled residential contracts, and selling certain properties and assets.
It appointed Grant Thornton in February 2019 to review the reorganisation and the potential impact on its working capital. A report in April highlighted the challenges in delivering the plan but the directors pressed on and tried to secure bridging finance to repay its bank debts and inject working capital into the business. It also received a £1.5m injection from shareholders James and Robert Nicholson.
However, despite the cash injected by the shareholders, Pochin’s was unable to secure bridging finance or secure resolutions to its problem contracts. It was also unsuccessful on a number of bids for new work. The lack of liquidity meant the business was now longer able to trade and called in the administrators. All of the firm’s employees were made redundant by 31 August this year.
The company owed a total of £89m to unsecured creditors, including £8.9m owed to trade and expense creditors. It also includes a £25m pension deficit for the company’s defined benefit pension scheme, £11.6m in intercompany creditors, and £18m in non-performance claims against the company which had eight live contracts when Grant Thornton was appointed.