Construction company creditors set for £29m hit

Unsecured creditors of a South East-based construction business look set to miss out on more than £29m following the company's collapse.

Lee Manning and Matt Smith of business advisory firm Deloitte were appointed as joint administrators of Longcross Construction on 16 June 2015 and subsequently Longcross Group on 29 June.

Longcross Construction, which reported turnover of £190m in its 2014 financial year, was the largest company in the group. It provided construction management services from offices in London, Sidcup, Surrey, Oxford, Birmingham and Sheffield and employed about 140 staff.

Longcross Group's engineering divisions - LX Engineering (North) Ltd, LX Engineering (South) Ltd and Longcross Fire and Security Ltd - are unaffected by the administration.

New documents seen by Insider have revealed that unsecured creditors of Longcross Construction are expected to suffer a shortfall of more than £29m, while secured creditors are expected to be paid in full.

The report to creditors has also shed light on the lead-up to the company's collapse.

A substantial proportion Longcross Construction's client base was historically made up of national grocery retailers, including Tesco and Sainsbury's.

However, in the last 18 to 24 months, the business sought to diversify its client base into sectors such as academia, residential developers and hospitals.

But the company began to suffer from financial losses on both ongoing and previously completed projects.

Prior to Longcross Construction entering administration, its directors entered into discussions with potential lenders to seek new finance for the company, but were ultimately unable to secure sufficient funding.

In addition to the deteriorating cash position, two winding-up petitions were filed against the company in June 2015.