David McLean goes into administration
This article is one of several all about builders who go into administration, in this case David McLean goes into administration . The purpose is to record and outline to non experts that yes, contractors go out of business all of the time.
Even the largest builders can go into administration and this usually means that a Client will lose all or most of the money owed to them by the contractor in advanced payments. And the worst thing is that it can happen anytime. Administrations or liquidations always happen ‘suddenly’.
So if you are thinking of hiring a builder for your next construction project, ask yourself, what would happen if they went out business in the morning?
Introduction
In 2008 the Flintshire based Contractor and Property Developer with a £250 million turnover went into administration.
Founded by a bricklayer, David McLean, after 65 years of trading since 1972, it left behind debts of over £100million.
David McLean operated in the North west, Midlands and South West of England as well as some parts of South Wales.
The accountants Deloitte were appointed as administrators to handle the process.
The business consisted of three subsidiaries including David McLean Contractors, David McLean Developments and David McLean Homes.
The Contracting part of the business was closed permanently but the house building company was bought out by Elan homes which was new company created by the outgoing senior management at David Mclean.
John Kendrick, the David McLean group finance director led the buyout of the housebuilding company for circa £40million.
Over 200 employees lost their jobs, mostly from the contracting division while those in the house building side kept their positions.
Successful contracts
David McLean was responsible for the construction of a lot of new houses, apartments and offices especially in the Merseyside area.
These included
- Kings Dock Liverpool
- East Village housing and leisure development in Duke Street Liverpool
- Initial regeneration of Princes Dock Liverpool including the Crowne Plaza hotel and offices
- 360 apartments at City Quay, Liverpool
Reasons for the administration
The reason for the administration was that while the property division had solid property and land assets, the contracting side was making losses.
There was a major health and safety issue where a worker was killed by a crane at Elysian Fields, Liverpool. The site had to close for over six months. This led to severe financial difficulties for the contracting business.
Bad debts also combined to produced a loss of £6million.
Finally the recession of 2009 led to a reduction of the house buying market so all things combined led to an unsustainable business.
Debts left behind
The banks were owed £60 million and creditors were owed £28 million.
Hundreds of sub-contractors and suppliers were left out of pocket by the collapse of the Deeside-based building business last September.
It is believed that one of the companies banks provided the financing for the new business which is now called Elan homes.