{"id":536996,"date":"2026-02-06T12:45:33","date_gmt":"2026-02-06T12:45:33","guid":{"rendered":"https:\/\/www.constructionnews.co.uk\/?p=536996"},"modified":"2026-02-06T09:01:44","modified_gmt":"2026-02-06T09:01:44","slug":"subcontractor-clings-on-after-merit-collapse","status":"publish","type":"post","link":"https:\/\/www.constructionnews.co.uk\/supply-chain\/subcontractor-clings-on-after-merit-collapse-06-02-2026\/","title":{"rendered":"Subcontractor clings on after Merit collapse"},"content":{"rendered":"

A subcontractor that was owed a six-figure sum after the collapse of offsite firm Merit says it was pushed to the brink after payment dried up last year on an NHS hospital project.<\/p>\n

The firm\u2019s director, who asked not to be named, spoke out about his experience after Construction News<\/em> reported last week that Merit\u2019s directors had started a new business using the Merit name<\/a>.<\/p>\n

Administrators for Merit Holdings last month said they were \u201cunlikely\u201d to recoup the \u00a317.4m owed<\/a> to unsecured creditors.<\/p>\n

The subcontractor\u2019s director said: \u201cAt one point I was worried about paying my mortgage. I was worried about being able to pay staff.\u201d<\/p>\n

He said his firm stayed on site last year despite mounting concerns about Merit\u2019s financial health due to the critical nature of hospital work and qualms about walking away from an NHS project.<\/p>\n

\u201cWe are not the sort of company that walks off a job,\u201d he told CN<\/em>. \u201cYou do not just down tools.\u201d<\/p>\n

He said alarm bells rang from the first valuation, after his firm spent four months on site but experienced payment delays.<\/p>\n

The subcontractor said Merit repeatedly assured him that payments were imminent and blamed temporary cashflow issues, a situation he said is common across the industry.<\/p>\n

\u201cIt was hard to pick up that there was a bigger problem because we often have cashflow pressures ourselves,\u201d he said.<\/p>\n

The director said his firm continued paying its own staff using money from other projects and dipping into its own resources to cover losses.<\/p>\n

\u201cWe were robbing Peter to pay Paul,\u201d he said. \u201cWe moved money across from other jobs just to keep people paid.\u201d<\/p>\n

He said the business survived only because it had other clients and a large order book in other sectors.<\/p>\n

\u201cNHS trusts were paying Merit as principal contractor,\u201d he said. \u201cThe question everyone is asking is: where did the money go?\u201d<\/p>\n

He said he had raised concerns directly with the NHS trust that employed Merit as the main contractor.<\/p>\n

\u201cThey are fantastic people,\u201d he said. \u201cBut they told us there was nothing they could do.\u201d<\/p>\n

Less than two months after Merit Group Services and related companies called in administrators<\/a>, a new company led by the firm\u2019s managing director Tony Wells, called Merit Industrialised Construction, bought Merit out of administration.<\/p>\n

Merit Group Services\u2019 other listed directors Kirsty Wells, David Philip Wilkinson and Matthew McGrady also joined the new firm, according to information on the Companies House website.<\/p>\n

In a statement provided to CN<\/em>, Merit Industrialised Construction said it had bought \u201csome limited assets\u201d of Merit, and that it had not procured Merit as a going concern \u2013 meaning it did not take on the old firm\u2019s liabilities, debts or staff.<\/p>\n

The statement added that the new business would \u201cutilise selected intellectual property, design systems and manufacturing know-how acquired from [Merit Holdings\u2019] administrators\u201d to service the design and construction markets.<\/p>\n

The new firm is backed by Modulex Modular Buildings, a global modular construction group supported by London-based Red Ribbon Asset Management, and HBEM, a US-based firm specialising in high-tech manufacturing environments.<\/p>\n

Tim Symes, an insolvency partner at Stewarts Law, told\u00a0CN<\/em> he accepted that creditors left with debts may feel Merit \u201cshould have instead \u2018faced the music\u2019 and paid its creditors\u201d.<\/p>\n

But he added: \u201cThe alternative of the old company not entering into a pre-packaged administration sale could have been worse for creditors because it would end up in liquidation,\u201d meaning the assets would likely be sold on a \u201cmuch lower-value break-up basis\u201d.<\/p>\n

In a statement, Wells said the administration of his old businesses \u201cwas a difficult outcome and resulted in the loss of a significant manufacturing presence in the region\u201d.<\/p>\n

The Merit Industrialised Services statement said Merit\u2019s administration had \u201cunderstandably caused concern among supply-chain partners, customers, project teams and employees\u201d.<\/p>\n

The firm added: \u201cWe recognise the uncertainty this situation has created and the significant impact it has had on those affected.\u201d<\/p>\n

It said Merit\u2019s former businesses could not find a solvent solution to financial pressures after working with administrators at Interpath, and took the decision to appoint administrators.<\/p>\n

The new firm added: \u201cWe fully respect the concerns of creditors and recognise the disruption caused by the administration process.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

A subcontractor that was owed a six-figure sum after the collapse of offsite firm Merit says it was pushed to the brink after payment dried up last year on an NHS hospital project. The firm\u2019s director, who asked not to be named, spoke out about his experience after Construction News reported last week that Merit\u2019s …<\/p>\n","protected":false},"author":90643,"featured_media":492675,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"ep_exclude_from_search":false,"footnotes":""},"categories":[554,552,57171],"tags":[],"class_list":["post-536996","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-administrations","category-financial","category-supply-chain","issue-online-news"],"yoast_head":"\nSubcontractor clings on after Merit collapse | Construction News<\/title>\n<meta name=\"description\" content=\"A subcontractor that was owed a six-figure sum after the collapse of offsite firm Merit says it was pushed to the brink after payment dried up last year\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, 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