Connaught debts 'could rise to £100m'
Friday 05 November 2010
Property services firm Connaught could owe more than twice the multimillion-pound debt originally thought after 50,000 missing invoices were discovered, administrators have said.
KPMG, which was appointed 10 weeks ago, said management accounts led it to believe the social housing arm of Connaught owed £46 million to thousands of unsecured creditors, ranging from a rugby club to a dairy supplier.
But as they compiled a creditors report, the administrators discovered thousands of supplier invoices that had not been processed and now believe debts could rise to as much as £100 million.
David Costley-Wood, joint administrator and restructuring partner at KPMG, told the Financial Times: "We were surprised at the level of backlog of invoices that had not been processed for a listed company."
Connaught was thrown into turmoil after warning in June that Government spending cuts would hit revenues. Some 1,400 employees were made redundant when KPMG were brought in - though 4,200 jobs were originally at risk.
The firm also left trade creditors - such as PTS Plumbing Trade Supplies, Jewson and Travis Perkins - nearly £57 million out of pocket and owe HM Revenue & Customs a £21.7 million outstanding bill.
The creditors' report also showed there was only £600,000 available to the unsecured creditors - meaning they are likely to recover less than one penny in every pound.
KPMG also said centrally-held employee records "proved to be unreliable and in a poor state".
Mr Costley-Wood said: "Relative to its size, it's one of the worst payroll records I've seen in 20 years."
Former chief executive Mark Tincknell is owed £28,708, while finance director Stephen Hill is owed £23,799.
The administration of Connaught's main division left around 280 contracts for councils and public sector bodies up in the air, and caused uncertainty for suppliers and contractors.
Rivals Morgan Sindall and Mears bought up the majority of contracts at Connaught Partnerships, saving thousands of jobs.
Connaught, which started in 1982 as a concrete repair specialist in Sidmouth, Devon, provides services to the environmental, social housing, public sector and compliance markets. The firm employed around 10,000 people across all its divisions before administration.
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