UK construction company plunges into administration with 300 jobs lost – £17m debt | UK | News
North East construction company Merit collapsed due to £25m debt; Around 300 people will lose their jobs after Merit Holdings and Merit Health go into administration towards the end of 2025, documents show (Image: Chronicle Live)
A British offsite construction firm that reported multimillion-pound profits just months ago has gone into administration. This leaves subcontractors and suppliers facing unpaid debts of £17.4 million and hundreds of workers are left unemployed.
The extent of the financial crisis has been revealed in a new report by administrator Interpath, which took control of Merit Holdings in November. Under Interpath’s proposals, it is “extremely unlikely” that unsecured creditors will recover money owed to them.
Northumberland-based Merit had some 284 staff on its books when it went into administration, all of whom have now lost their jobs, according to Chronicle Live.
Despite the sudden collapse, the company appeared to be financially sound, according to the latest accounts. Results for the year ending 30 June 2025 showed turnover of £79.7 million and pre-tax profits of £4.3 million.
The business was founded by former CEO Tony Wells and has built a solid reputation in the off-site and modular construction industry.
North East construction company Merit collapsed due to £25m debt; Around 300 people will lose their jobs after Merit Holdings and Merit Health go into administration towards the end of 2025, documents show (Image: Chronicle Live)
But the administrator’s report reveals that following the start of the administration process, an agreement was reached with a connected party for a “significant disposal of assets” for £396,000.
According to the documents, the buyer was a newly formed firm called Merit Industrialized Construction Ltd. The documents state: “The group has experienced cash flow pressures due to delays in the launch of major projects and disagreements over agreeing contract changes with certain key customers.
“Faced with short-term cash flow pressures and long-term financing requirements, the group acquired Interpath Limited on 30 July 2025.
“On 29 August 2025, Merit Group Services received a winding up petition from HMRC and the court date for this petition was set for 15 October 2025. The court decided to adjourn this petition for six weeks to allow the group to find a solution.
“The business reached its overdraft limit in early September 2025 and the group received a temporary increase of £500,000 from the bank to help meet payroll. “In a bid to improve its cash position, the group entered into a settlement agreement over contractual amendments with a major customer, but an agreement was not reached.
“On November 14, the administrators concluded that there was no realistic prospect of reaching a solvent resolution and appointing administrators.”
Companies House records show that Kirsty Wells, Matthew McGrady and David Wilkinson, directors of Merit Holdings, were also directors of Merit Industrialized Construction Ltd at the time of the deal. Records also show Kirsty Wells set up two other companies, Blaze Technology and Newco MHL Ltd, as the administration process began in November.
While Interpath’s report does not suggest any wrongdoing, it does highlight the dire situation for creditors, with unsecured suppliers and subcontractors now setting themselves up for serious financial losses.
