A group of subcontractors owed £5m as a result of the failure of Ballast UK will appoint lawyers next week to advise them on how to get their money back.
The subcontractors lost the money on the East Lothian PPP schools contract, and are seeking advice on whether they should take legal action against Ballast Nedam, the contractor's Dutch parent, East Lothian council, the Innovate East Lothian consortium, or all three.

The eight subcontractors involved decided to seek legal advice earlier this week and are meeting at least two law firms this Monday before making a formal appointment.

A spokesperson for the group said: "It was agreed that the best route forward was to look at the appointment of legal representation to advise us on who we should be targeting."

Some believe that the council and Innovate, of which Ballast was a part, had duty of care to ensure that the contractor was healthy enough to pay its subcontractors. Others believe that Nedam misled them over Ballast's trading ability, although the Dutch company denies this.

n Building has obtained a letter from Nedam dated 15 October, the day Ballast went into administration and two days after Nedam announced it would no longer support its UK arm.

The document reminds Ballast's debtors that they should pay money directly to Holland rather than the UK. Nedam originally requested this in September. Ballast sources claim this diversion could have wiped out the UK firm's cash flow, making it impossible for administrator Deloitte & Touche to keep it running.

Ballast Nedam was unavailable for comment.