Contract disputes and projects delays blamed as close to 350 people lose their jobs

Contract disputes and project delays are being blamed after the main trading businesses of offsite specialist Merit went into administration this week with the loss of close to 350 jobs.

Interpath Advisory was appointed on Tuesday and Wednesday as administrator for Merit Group Services Limited, Merit Health Limited and Merit Holdings Limited.

In a statement, Interpath said: “Over recent months, Merit had experienced contractual issues and delays to a number of its major contracts, which in turn had a significant impact on cashflow.

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Merit’s turnover was £80m but had plans to eventually get this up to £450m

“With liquidity pressure mounting, Merit Group Services Limited became subject to an unexpected winding up petition, which adversely affected new work awards and resulted in delays to a number of projects.”

Joint administrator James Lumb added: “The UK construction industry continues to face tremendous headwinds, with rising costs, high interest rates and subdued private sector demand having an impact on larger contracts in particular.

“Although Merit has developed an outstanding reputation for the quality and innovation of its specialist offsite solutions, these broader challenges proved to be insurmountable.” He said the majority of the firm’s 340 staff had been made redundant.

Based in Northumberland, Merit posted a pre-tax profit of £5.8m in its last set of financial results filed at Companies House for the year to June 2024. The figure was down nearly a quarter on last time with turnover also down, by 10% to £80m.

Merit, which specialised in the healthcare, life sciences and education sectors, worked out of a 270,000sq ft offsite manufacturing facility in Cramlington, with the firm looking at expanding the site by a further 250,000sq ft as part of a long-term plan to get annual turnover up to £450m.

Interpath said Merit’s bosses had been looking at several options to keep going including a sale, refinancing and investment. “However, when it became clear that a solvent solution could not be found, they took the difficult decision to seek the appointment of administrators.”

Lumb said Interpath was continuing “to explore options in order to find a solution that works for Merit’s customers, employees and creditors”.

Merit was set up in 2002 by Tony Wells and in an interview with Building last year said: “I especially dislike retentions and bonds. Such archaic behaviours rooted in client expectations.”