Buckingham Group owed £108m at collapse

Buckingham Group imploded owing more than £108m, according to its administrators.

The tier one contractor collapsed earlier this month after suffering “significant and increasing losses incurred on key sports and leisure contracts due to inflation pressures”, according to a statement of proposals document written by administrators from Grant Thornton.

Buckingham, which had 669 staff and offices in Stowe, Birmingham, Doncaster, London and Manchester, also sustained “losses […] on a key civils/build project, delays on contracts and delays on recovering significant works in progress balances”, the document states.

Grant Thornton said the issues created a cashflow crisis, as receipts were received at the end of the month while large subcontractor payments were due mid-month.

The group owes £108m, with 1,258 claims having been lodged with the administrator. Although most of these claims relate to separate businesses, some suppliers have lodged multiple claims.

Grant Thornton said it expected ordinary preferential creditors to be paid in full, with payment also set to be made to secondary preferential creditors. However, it said “it is unclear whether there will be a return to the unsecured creditors”, adding that it depended on “certain claims and debtor realisations”.

Buckingham had £4.8m in a bank account with HSBC – one of its creditors – when it went under, although this money has yet to be transferred to the administrator’s account.

The administrator said: “As a result of the increasing losses being incurred on contracts and a lack of visibility on key cashflow matters such as HM Revenue & Customs (HMRC) Time to Pay [arrangements] (TTP) and contract adjudications, the advance rate on funding being provided through the company’s invoice finance facility was reduced to nil in July 2023.

“This, together with HMRC rejecting a proposal for a further TTP in August 2023 and increasing creditor pressure due to not being able to meet the full supplier/subcontractor payment run, resulted in Grant Thornton being engaged by the company on 16 August 2023 to explore a sale of business and assets.”

Grant Thornton was unable to sell the business, although it sold the company’s rail division and related assets to Kier for £9.6m. The book value of the assets sold to Kier was approximately £11m, it said.

Kier paid £5.67m to take over Buckingham’s live rail projects, £1.89m for its HS2 contract and around £333,000 each for retentions, debts and work in progress.

Kier paid a further £1 each for customer contracts; a West Midlands customer contract; supplier contracts; business intellectual property; goodwill; business records; information technology; stock; and plant and equipment.

Grant Thornton said before Buckingham collapsed it approached “various debt providers, together with a number of special situation funds, private investors and UK and oversees trade buyers”.

But it added: “Despite contacting in excess of 20 parties, no party was willing to provide additional debt finance to the company or was keen to pursue a solvent purchase of the company’s share capital.”