ISG Administration
Discussion
Apparently ISG are to enter formal administration on Monday (23rd September).
Would that be the largest construction company to go, as revenue of 2.2 billion with 3000 direct employees (and thousands more contractors/subbies) ? I dread to think of the monies they will owe to its supply chain, and what the overall impact will be to the industry itself.
Must be a lot of other main contractors on the verge of similar.
Would that be the largest construction company to go, as revenue of 2.2 billion with 3000 direct employees (and thousands more contractors/subbies) ? I dread to think of the monies they will owe to its supply chain, and what the overall impact will be to the industry itself.
Must be a lot of other main contractors on the verge of similar.
Yes, we are one of those sub contractors. Just by pure luck of timing, our fit out on an ISG site was not due to start until the next month, so while we will have a large amount of stock and some bespoke parts, we will be able to absorb this.
However, Lots of small companies similar to us will shoulder the bulk of the losses…
However, Lots of small companies similar to us will shoulder the bulk of the losses…
No real details, and all obviously be to taken at face value, but was advised the buyer they had lined up for the company couldn't prove funds existed so the deal fell through, and ISG were left with no option but to call in insolvency specialists, which they are to formally appoint Monday.
To be honest, it was a rumour floating around back in March time that they were on the brink, so not something that is a total shock to many.
But yes, the smaller subcontractors will/may struggle as the larger ones will try and pass it on accordingley as per the industry which is Construction allows, and the world will continue until the next one fails.
At some point people will realise that making 1.5% nett profit isn't enough in an industry where retentions are generally 1.5/2.5% (after PC), so these main contractors purely operate on positive cashflow, hence never being able to sign up and stick to 30 day payments. They even get to keep the subcontractors VAT monies these days to assist their cashflow, and still are on the brink.
To be honest, it was a rumour floating around back in March time that they were on the brink, so not something that is a total shock to many.
But yes, the smaller subcontractors will/may struggle as the larger ones will try and pass it on accordingley as per the industry which is Construction allows, and the world will continue until the next one fails.
At some point people will realise that making 1.5% nett profit isn't enough in an industry where retentions are generally 1.5/2.5% (after PC), so these main contractors purely operate on positive cashflow, hence never being able to sign up and stick to 30 day payments. They even get to keep the subcontractors VAT monies these days to assist their cashflow, and still are on the brink.
Terrible news for the wider Industry, supply chain will be heavily impacted as credit insurance has been limited given news in the market unlike the recent failure of Buckingham Group.
The industry need to change, fixed price contracts, huge risks, millions wasted on legal costs protecting positions rather than delivery. Would not be surprised for this to be the start of many domino’s falling.
The industry need to change, fixed price contracts, huge risks, millions wasted on legal costs protecting positions rather than delivery. Would not be surprised for this to be the start of many domino’s falling.
Definitely a big name but as said above, the profit margins of these businesses just aren't sustainable.
Been working in construction for many years and unless you do have cash reserves, any small issue can cause this.
It's the small sub-contractors that will ultimately pay the biggest price for this. As client though, i see opportunities to help them out but will need the administrator to be flexible - surely better to keep all these smaller businesses going and not lose the experience that they offer to the wider industry.
In a country that is suffering a skills shortage we have to do all we can to support them.
Not working directly with isg at the moment but know many of their subbies so will be seeing what my business can do to help soften the blow
Been working in construction for many years and unless you do have cash reserves, any small issue can cause this.
It's the small sub-contractors that will ultimately pay the biggest price for this. As client though, i see opportunities to help them out but will need the administrator to be flexible - surely better to keep all these smaller businesses going and not lose the experience that they offer to the wider industry.
In a country that is suffering a skills shortage we have to do all we can to support them.
Not working directly with isg at the moment but know many of their subbies so will be seeing what my business can do to help soften the blow
Just spent the last four hours with some of the best people in fit out. Absolutely devastating news to some old work colleagues and more importantly, friends. What a disgrace Carthexis are to, firstly, drain all working capital from this company but secondly, just abandon it once asset stripped to the bone. Don't get me wrong, there was enough fiddling of the books and enough big houses built out of back handers, and helicopter rides around Monaco that didn’t help, but their day will come. The most disgraceful part of this, is a billionaire can buy, financially strip and abandon so many good hard working people on a whim, and never feel one ounce of remorse or incrimination. That’s just the world we live in now I guess.
My thoughts go out to all those suppliers that have been wilfully strung along for the last three months on promises and ultimately, hot air. From CEO to any Director, this company was rotten to the core and it is just typical that the only people that will feel this most, are those who gained the least. I really hope the administrators see the black holes in the books and prosecute every single one of them that profited from this great company’s demise. But guess what? I very much doubt it.
My thoughts go out to all those suppliers that have been wilfully strung along for the last three months on promises and ultimately, hot air. From CEO to any Director, this company was rotten to the core and it is just typical that the only people that will feel this most, are those who gained the least. I really hope the administrators see the black holes in the books and prosecute every single one of them that profited from this great company’s demise. But guess what? I very much doubt it.
Just an FYI but they’ve appointed administrators this evening rather than the rumoured coming Monday.
https://www.constructionenquirer.com/2024/09/19/is...
The fitout side hasn’t filed yet and may continue trading.
https://www.constructionenquirer.com/2024/09/19/is...
The fitout side hasn’t filed yet and may continue trading.
Seemingley no option but to do so straight away to protect the site as companies will strip them to recover what they can knowing sweet FA will be recoverable through administration.
The sites will now be closed and made safe, until someone found to take them over, which the supply chain will be hoping is quickly, and that they are re employed to complete the works which certainly isn’t guaranteed.
The sites will now be closed and made safe, until someone found to take them over, which the supply chain will be hoping is quickly, and that they are re employed to complete the works which certainly isn’t guaranteed.
Once the rumours of it being imminent reach a certain point subbies generally take matters into their own hands in terms of tools and materials left on site. Been there done that with two recent failures in last couple of years.
We don’t work for ISG and haven’t for a while as our credit insurer wouldn’t cover them. The initial rumours of problems had been around since last Xmas so they’ve done well to keep going this long. Failure of certain specialist subbies over the last year won’t have helped as don’t believe they had any insurance in place against supply chain failures.
There are a couple of other big players that based on credit insurance are not in the healthiest of places.
We had an our cover significantly cut against well known tier 1 this week, couple of million down to 100k.
We don’t work for ISG and haven’t for a while as our credit insurer wouldn’t cover them. The initial rumours of problems had been around since last Xmas so they’ve done well to keep going this long. Failure of certain specialist subbies over the last year won’t have helped as don’t believe they had any insurance in place against supply chain failures.
There are a couple of other big players that based on credit insurance are not in the healthiest of places.
We had an our cover significantly cut against well known tier 1 this week, couple of million down to 100k.
Nonsense filter said:
Just spent the last four hours with some of the best people in fit out. Absolutely devastating news to some old work colleagues and more importantly, friends. What a disgrace Carthexis are to, firstly, drain all working capital from this company but secondly, just abandon it once asset stripped to the bone. Don't get me wrong, there was enough fiddling of the books and enough big houses built out of back handers, and helicopter rides around Monaco that didn’t help, but their day will come. The most disgraceful part of this, is a billionaire can buy, financially strip and abandon so many good hard working people on a whim, and never feel one ounce of remorse or incrimination. That’s just the world we live in now I guess.
My thoughts go out to all those suppliers that have been wilfully strung along for the last three months on promises and ultimately, hot air. From CEO to any Director, this company was rotten to the core and it is just typical that the only people that will feel this most, are those who gained the least. I really hope the administrators see the black holes in the books and prosecute every single one of them that profited from this great company’s demise. But guess what? I very much doubt it.
Same old story then... disgusting how this is allowed to happen and people get away with it time and time again.My thoughts go out to all those suppliers that have been wilfully strung along for the last three months on promises and ultimately, hot air. From CEO to any Director, this company was rotten to the core and it is just typical that the only people that will feel this most, are those who gained the least. I really hope the administrators see the black holes in the books and prosecute every single one of them that profited from this great company’s demise. But guess what? I very much doubt it.
Edited by CorradoTDI on Friday 20th September 00:11
I work(ed) for ISG and would reiterate some of the comments on here. The American billionaire business owner, the prospective South African billionaire buyer and the UK stat board seem to have played everyone over the last few months. As an employee we’ve had no communication whatsoever about the alleged sale or refinancing since early July. Now we’ve all had an email at 22:30 confirming what we’ve all read in the trade press earlier this evening. I’m not after any sympathy, I’ll survive this financially, but I feel embarrassed and deeply sorry for the supply chain we’ve dragged along for months and months off the back of our strong local relationships and the promise of it all coming good “imminently” many of whom are now likely to sink as a result of this mess.
I don’t understand business legislation but it’s interesting that the UK parent ISG Limited and the
Fit Out company have not filed for administration. Does this mean they will continue to trade? I can’t see how they can from a reputational perspective alone.
I don’t understand business legislation but it’s interesting that the UK parent ISG Limited and the
Fit Out company have not filed for administration. Does this mean they will continue to trade? I can’t see how they can from a reputational perspective alone.
Edited by se9boy on Friday 20th September 00:34
Edited by se9boy on Friday 20th September 00:36
Edited by se9boy on Friday 20th September 00:36
Rainbow01 said:
Waiting game.for him then I guess.. just hope he doesn't feel.like he's wasted a year with them. He even had his university degree funded by them so let's see...not fair for a school leaver to be in this situation.
On the flip side, he probably has a 3 year tie in, which he’s now free of, university pals paid up, free agent!Realise it sucks, sorry to hear for him, but there may be a slight benefit here that means if he can find another role his pay may be better
Email to all employees last night (around 10pm);
“Some of you may have seen reports in the media that ISG has filed for administration here in the UK. With sadness, I can confirm that this is factually correct.
This was not the way I wanted you to find out and the news should not have leaked in this way. We had a managed plan to tell you what was happening on Monday once we had more clarity, but news has leaked at the filing stage – and that is why I am writing to you tonight.
Before I go into any more explanation, I want everyone to know that – contrary to the press reports – you will be paid on Monday as normal. I appreciate this is only a small comfort against a context of uncertainty for you all in terms of what happens next.
You are owed an explanation of what has been happening over recent months. I know there has been speculation and rumour for some time, and we have tried everything to save ISG from this situation. And know there must have felt a lack of communication.
The truth is that every communication we have done has been leaked to the press by a very small minority, which has not been helpful as we have worked to rescue ISG. And that is why we have been very cautious in the past couple of months.
By way of background, the Group’s trading and cash performance has been impacted by legacy issues relating to the large loss-making contracts secured in between 2018 and 2020 (primarily in the Residential, Logistics & Distribution sectors as well as some Data Centre projects). Trading out these projects has had a significant effect on our liquidity. So even though we have been profitable this year, our legacy has led us to a point where we have been unable to continue trading.
I want you to know there have been significant efforts made to secure a sale of the Group over many months. While there has been speculation for some weeks now, I can confirm that it was not possible to conclude a sale, as the purchaser could not satisfy the funding needed to recapitalise the business. Cathexis also looked at refinancing the company in recent months but has been unable to execute. We also looked at selling individual business units to third parties but again, we have not been able to conclude these negotiations in the timescale.This has left us no option but to file for administration. Again, I am so sorry to have to share this news
I know all of you will still hold onto what is important at this time, whether that is ensuring we keep people sate, supporting colleagues, or managing clients and subcontractors
If you are site based
• Sites will not open tomorrow. You are not required to come to site
• We will be standing subcontractors down and there will be a controlled process for them to recover plant and tools once the administrators are formally in place. They will be notified when that is possible
• Sites must be left secure and safe at all times.
If you are office based
• Offices will be closed.
• You will be notified when you can come and collect your things.
• Some individuals will be admitted should there be a requirement from the administrators for them to do so.
Once again, I am so sorry to have to share this news. Thank you for all your support as an employee.
The next step will be the appointment of the administrator and we will be in touch soon about what this means and how you can get the information you will need looking ahead.”
“Some of you may have seen reports in the media that ISG has filed for administration here in the UK. With sadness, I can confirm that this is factually correct.
This was not the way I wanted you to find out and the news should not have leaked in this way. We had a managed plan to tell you what was happening on Monday once we had more clarity, but news has leaked at the filing stage – and that is why I am writing to you tonight.
Before I go into any more explanation, I want everyone to know that – contrary to the press reports – you will be paid on Monday as normal. I appreciate this is only a small comfort against a context of uncertainty for you all in terms of what happens next.
You are owed an explanation of what has been happening over recent months. I know there has been speculation and rumour for some time, and we have tried everything to save ISG from this situation. And know there must have felt a lack of communication.
The truth is that every communication we have done has been leaked to the press by a very small minority, which has not been helpful as we have worked to rescue ISG. And that is why we have been very cautious in the past couple of months.
By way of background, the Group’s trading and cash performance has been impacted by legacy issues relating to the large loss-making contracts secured in between 2018 and 2020 (primarily in the Residential, Logistics & Distribution sectors as well as some Data Centre projects). Trading out these projects has had a significant effect on our liquidity. So even though we have been profitable this year, our legacy has led us to a point where we have been unable to continue trading.
I want you to know there have been significant efforts made to secure a sale of the Group over many months. While there has been speculation for some weeks now, I can confirm that it was not possible to conclude a sale, as the purchaser could not satisfy the funding needed to recapitalise the business. Cathexis also looked at refinancing the company in recent months but has been unable to execute. We also looked at selling individual business units to third parties but again, we have not been able to conclude these negotiations in the timescale.This has left us no option but to file for administration. Again, I am so sorry to have to share this news
I know all of you will still hold onto what is important at this time, whether that is ensuring we keep people sate, supporting colleagues, or managing clients and subcontractors
If you are site based
• Sites will not open tomorrow. You are not required to come to site
• We will be standing subcontractors down and there will be a controlled process for them to recover plant and tools once the administrators are formally in place. They will be notified when that is possible
• Sites must be left secure and safe at all times.
If you are office based
• Offices will be closed.
• You will be notified when you can come and collect your things.
• Some individuals will be admitted should there be a requirement from the administrators for them to do so.
Once again, I am so sorry to have to share this news. Thank you for all your support as an employee.
The next step will be the appointment of the administrator and we will be in touch soon about what this means and how you can get the information you will need looking ahead.”
Sad to see but sadly symptomatic of the industry.
Having dealt with the same situation with Benson back in 2005 as a Project Manager, the banks, liquidators and owners are the only winners here.
My advice would be that anyone in the supply chain should get any materials off site ASAP and put 'somewhere' safe. If your company is not going to be able to ride out the loss then make plans for the inevitable. Tradesmen should be allowed site access to remove personal tools.
Any employees should expect to be 'ex employees' soon and also make plans accordingly.
Having dealt with the same situation with Benson back in 2005 as a Project Manager, the banks, liquidators and owners are the only winners here.
My advice would be that anyone in the supply chain should get any materials off site ASAP and put 'somewhere' safe. If your company is not going to be able to ride out the loss then make plans for the inevitable. Tradesmen should be allowed site access to remove personal tools.
Any employees should expect to be 'ex employees' soon and also make plans accordingly.
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