Midas Construction goes into Administration

Midas Construction goes into Administration

Introduction

Midas was an Exeter-based contractor operating in housing, property development and property services.

It went into Administration ‘suddenly’ blaming Brexit, the delay or cancellation of contracts, cost inflation and so forth.

At the time it had employed nearly 500 staff and had a turnover of nearly £300 million.

Importantly, it went out of business owing more that sixty million pounds including £4.5 million to former employees

Why is this a construction horror story?

We make a note of this administration because its a reminder that no matter how big a building contractor is, they are only a couple of bad projects from going out of business.

You have to remember that Midas were a big company with a great reputation. Clients would have trusted them to carry out big construction contracts.

Imagine if you were a Client who had hired this company to build your hotel or housing estate etc.

If you had overpaid them at month, all that money is gone.

Should the works that Midas have completed be faulty then its the Client who will be paying for it.

The important thing for Clients and subcontractors to remember is that Contractors do not have any assets, they are just essentially a shell company that is formed for the specific function of acting as main contractor.

Main contractors don’t do any work apart from manage so they have no plant, tools, equipment or any tangible assets.

If a Contractor goes out of business, the top Directors will all get new jobs elsewhere and eventually so too will the project managers, quantity surveyors, engineers etc.

It is always the Client and the sub-contractors, suppliers and banks that lose money when a Contractor goes out of business.

So if you are a Client you have to be ultra wary when paying a contractor. Never overpay.