Thousands of jobs could be at risk and dozens of government construction projects paused as ISG, one of the UK’s largest contractors, filed for administration.
In the biggest collapse of a UK construction company since Carillion, the ISG chief executive, Zoe Price, confirmed in an email on Thursday that the company had filed for administration and shut down all of its sites.
ISG is involved in 69 live central government schemes, including several projects as part of the Ministry of Justice’s plan to increase the capacity in Britain’s prisons by an extra 20,000 spaces.
It is also working on schemes for the Department for Work and Pensions and several school building projects.
The Cabinet Office said it had implemented “detailed contingency plans” and departments were working to ensure sites were safe and secure.
ISG is the sixth biggest construction contractor in the UK by turnover, with revenues of £2.2bn and about 3,000 staff.
In 2018, Carillion, the country’s second-biggest contractor, collapsed owing suppliers £7bn.
In the email to staff, first reported by Construction Enquirer, Price apologised and said the group’s cashflow was affected by large lossmaking contracts secured between 2018 and 2020.
She added: “Trading out these projects has had a significant effect on our liquidity. So even though we have been profitable this year, our legacy has led us to a point where we have been unable to continue trading.”
All of its offices and construction sites were closed on Friday, while subcontractors have been stood down from their work.
Data from the construction analysts Barbour ABI has estimated that ISG is involved in £1.8bn worth of live government construction projects.
This includes 22 live projects with the Ministry of Justice, including a number of prison schemes such as the £300m extension of Spring Hill in Buckinghamshire.
This comes only weeks after the government let out 1,700 offenders early to ease overcrowding.
ISG also has contracts with high-profile private clients such as Apple, Google and Barclays.
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Six of ISG’s subsidiaries have also filed notices to enter administration, including ISG Engineering Services and ISG Retail. The Guardian understands that EY is being lined up as administrator.
There were reports earlier this year that the company was facing cashflow problems, and the chief executive, Matt Blowers, and the finance director, Karen Booth, left the company in February and March respectively.
In July, it reported that it had found a potential buyer, with the investment firm Antipodean Holdings in discussions over a takeover.
Price said in her email to staff that it was not possible to conclude the sale as the purchaser could not satisfy the funding needed.
Antipodean Holdings rejected this claim on Friday, saying it was ready to strike a deal to secure jobs and was committed to a deal until ISG stopped communicating with it on 12 September.
Price said its owner, Cathexis, also looked at refinancing the company but was unable to complete this.
EY declined to comment.
