Creditors to lose £1.6m after Browns collapse

Published:  03 November, 2011

MANCHESTER: Hundreds of unsecured creditors will lose at least £3.2m following the fall into administration of Browns Construction Group. The firm went under in August owing £6.5m.

Administrators are currently battling to recover £3.3m owed on disputed contracts.

But Begbies Traynor Group fear the final sum recovered through legal fights will be much less leaving subcontractors millions out of pocket.

The contractor was widely known as Brown's of Wilmslow and was sold to the London-based Headcrown Group in 1985.

Documents seen by the Manchester Evening News revealed Browns collapsed owing £6.5m to unsecured creditors including £1.6m to 272 sub-contractors, who have claims ranging from £9 to £90 000. Headcrown owes around £3.5m.

In a report from administrators, Browns' former finance director Nigel Jepson said: "The downturn in the building industry following the recession had a severe impact on the company's construction activities whereupon additional working capital was required to fund a number of new contracts as well as a number of contract disputes which were occurring on a number of current contracts.

"Financial support was provided by Headcrown with £3.6m injected between 2009 to date over a number of transactions. Unfortunately trading conditions deteriorated and in the absence of any visible evidence of a strengthening cash flow position, Headcrown advised on August 16 that they were no longer prepared to offer financial support to the company."

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