ARJ owed £12.5m to supply chain at time of collapse


Stevenage-based contractor ARJ Construction owed its subcontractors and supply chain £12.5m when it went under last month.

Documents released by administrator FRP Advisory reveal that when it went under ARJ owed subcontractors £4.9m and the wider supply chain £7.6m. It also owed £940,000 to its former employees in redundancy and notice pay.

The company had 111 employees at the time of its collapse, of which 106 were made redundant immediately.

FRP expects there will be “sufficient funds available” to pay unsecured creditors including the subcontractors, supply chain and former employees – but it is not clear how much will be paid out.

The firm appointed an administrator despite a soaring revenue and strong cash balance in its last published accounts, for the year to April 2023, with one market analyst saying the appointment of FRP Advisory “came out of the blue”.

Its latest accounts showed that revenue rose by 61 per cent from £72.7m to £117m. ARJ also had no bank loans in its while its pre-tax profit inched up to £2.8m from £2.5m.

But FRP revealed that ARJ was hit by a number of loss-making projects and “well-publicised problems encountered by the construction industry”, including inflation, high material prices and rising labour costs.

“The loss-making contracts placed an immense strain on the cash position, ultimately eroding cash reserves, thus severely impacting upon [ARJ’s] ability to trade,” it added.

“It recently became clear that [ARJ] would be unable to complete its existing contracts without significant investment.”

ARJ had 13 live contracts when it entered administration, including a £24m expansion of Mollies Hotel (pictured) in the former Granada Studios for Allied London Properties, and a £15.6m office fit-out job in St John’s Quarter for Booking.com.



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