Readie Construction - Case Update

Costa Pedhiou and Gary Shankland of Begbies Traynor have provided an update on their administration of what was once reportedly the largest employee-owned construction company in the UK.

Essex-based Readie Construction was founded in 2007 and grew significantly over the next decade and a half, driven by a significant amount of repeat business and referrals, as well as growth in the market for industrial buildings between 2015 and 2022.

In 2021, the company transitioned to ownership via an employee owned trust (EOT), with all shareholders selling their shares such that the company became wholly-owned by the EOT for the benefit of its employees. In the few years before that, the average size of the company's projects had increased to circa £12.5 million. Further subsequent major projects were also undertaken by the company, including Equation, Felixstowe worth £35 million in 2022/2023 and Momentum, Rainham for Henry Boot worth £52 million in 2023/2024. Staff headcount generally tracked revenue growth and peaked at 275 during 2023, but by January 2024, numbers had reduced to 165 due to declining revenue and workload.

Whilst trading was continuous during the pandemic, margins were weaker due to lower outputs and longer project durations. The years that followed the pandemic have been difficult for the company, with supply chain issues, a shortage of materials, and cost inflation all having a significant impact, particularly because most of the company’s contracts were fixed-price. The Ukraine War exacerbated these issues and put extreme pressure on the company and its supply chain, leading to many subcontractor failures, including two of the company's largest mechanical and electrical subcontractors. Although Readie Construction took steps to minimize costs and restructure operationally, cash was significantly worsening by late January 2024. In February 2024, the company entered administration.

The directors confirmed that they had explored a potential acquisition shortly before the administration. However, a vanilla sale may have taken circa six to nine months to complete, which was not an option given the company’s trading position and growing creditor pressure. A pre-pack sale with this party was considered, but ultimately not pursued because the party observed substantially diminished site attendance and subcontractors attending site to remove their plant & machinery.

Following their appointment, the joint administrators retained 15 employees to assist with the administration process. Gordon Brothers were instructed to assist with realising the company’s assets, but advised after collecting a small amount that the cost of pursuing any remaining assets would far outweigh any potential benefits.

Quantity surveyors Leslie Keats were instructed to review the company's ongoing and completed contracts to determine whether any realisations could be achieved. At this point, total recoveries are anticipated to be in the region of between £1.5 million and £4.2 million.

This will likely form the bulk of recoveries, since it looks like the £4.8 million owed to the company by its parent, Readie Management, will not be recovered in light of the parent’s intervening liquidation.

The joint administrators have also been assisted by Eddisons (which provided a valuation of the leasehold premises) and solicitors Hill Dickinson. Read their most recent progress report here.