Modular builder Merit enters administration

Offsite construction specialist Merit has ceased trading after entering administration, resulting in the loss of most of its 340 jobs.

James Lumb and Will Wright of Interpath were appointed as joint administrators to Merit Health Limited and Merit Holdings Limited on 17th and 18th November respectively.

They were also appointed to the wider Merit Group Services business.

Based in Cramlington, Northumberland, Merit delivered modular construction projects across the healthcare, life sciences, education, battery technology and aerospace sectors.

The company suffered contractual disputes and delays on several large jobs in recent months, which severely impacted cashflow. The pressure increased after the group became subject to an unexpected winding up petition, stalling new contract awards and delaying work on existing projects.

Directors explored refinancing and sale options before opting to place the business into administration after failing to find a solvent solution, the administrators said. As a result, Merit has ceased operations and most of its staff have been made redundant.

Lumb, managing director at Interpath, said the firm had built a strong reputation for quality offsite work but had been overwhelmed by sector-wide challenges. He 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.”

Administrators said they are continuing to explore options for the business and are supporting redundant employees with claims to the Redundancy Payments Service.

“The process of administration gives some of Merit’s creditors a better prospect of some recovery than liquidation,” said Nick Stockley, partner at law firm Mayo Wynne Baxter.

“The reality is that unsecured creditors will get very little back, regardless of whether the companies are in either administration or liquidation, and the effect of Merit’s demise will be felt down the supply chain.”

Last week, Construction News reported that work to build a £33m hospital in Berwick has halted after Merit filed a notice of intention to go into administration.

The Northumberland firm had been appointed in 2023 to build a state-of-the-art hospital in Berwick.

In a 2022 interview with CN, Merit boss Tony Wells predicted that his firm would turnover £200m in 2023/24.

In June, Merit was named on a new four-year framework agreement for modular buildings, offering NHS trusts and public sector bodies a route to procure buildings valued from below £5m to above £25m.

Source: Interpath/Mayo Wynne Baxter announcements