Administrators dealing with the fall of South West construction leviathan Midas have sent a report to the Government which could lead to its directors being disqualified. Global business consultancy Teneo Financial Advisory Ltd is also encouraging people owed money to report any concerns they have about events leading to Exeter-headquartered Midas going bust.
William Telford www.devonlive.com
London-based Teneo has confirmed it has sent a confidential report to the Insolvency Service which will look at whether action should be taken against Midas board members. Midas Group Ltd and its subsidiaries collapsed into administration in February 2022 with estimated debts of at least £70m. Midas was involved in huge construction projects across the South West and companies owed cash include several in Plymouth.
The Insolvency Service, a Government agency, has civil powers to consider complaints about the conduct of directors of companies that have entered into formal insolvency proceedings, including administration. It can order that people be disqualified from acting as company directors.
Administrators must report on the conduct of directors under the Company Directors Disqualification Act 1986. Teneo has said it has prepared a confidential report on the conduct of Midas directors in the three years leading up to its appointment as administrators. At the time of entering administration, Midas directors included Stephen Hindley, Alan Hope and Peter Skoulding.
A Teneo spokesperson said: “This report has been provided to the Insolvency Service and will be used in their assessment of whether any action should be taken against the directors, for example, disqualification.”
However, Teneo clarified that the administrators’ report to the Insolvency Service is confidential and neither its contents nor the administrators’ conclusions will be reproduced in any progress reports to creditors.
But Teneo said that In addition, it is also required to consider whether there is any action that could be taken against directors and other organisations, including auditors, that would result in recoveries of cash for the administration estate. The spokesperson said: “This assessment is ongoing and the administrators will report in their progress reports if any actions are commenced/proposed.”
Teneo also said it is also encouraging any of Midas’s creditors to contact the administrators should they have “any concerns regarding the conduct of the company in the period prior to the administrators’ appointment.”
It is also working to recover cash owed to Midas before it went under, including for work in progress. Teneo said: “The administrators will report on recoveries achieved during the course of the administration. However, we note that collection of contractual debts in an insolvency process often leads to substantially lower recoveries than book value, particularly where there is no ongoing business to complete the related contracts.”
Teneo is already dealing with claims from nearly 2,000 creditors, including dozens in Plymouth. Midas Group Ltd and its subsidiaries Midas Construction Ltd, Midas Retail Ltd, Mi-Space (UK) Ltd, Mi-Space Property Services Ltd, Midas Commercial Developments Ltd and Falmouth Developments Ltd all fell into administration in early 2022 blaming a toxic cocktail of Covid, inflation, money owed to them but not paid, and cash flow problems for causing a financial doomsday.
Among many Plymouth firms listed as creditors are Collaton Safety Management, D&L McBride Building Consultancy, EDF Energy, LTC Powered Access, Plymouth Removers, DCA Public Relations, Western Power Distribution, ADS Window Films, All Seasons Group Services, B&C Carpentry, and BPUK Environment.
The two main companies in the Midas family – Midas Group Ltd and Midas Construction Ltd – have realisable assets of just £8,354,644. But when preferential and secured creditors are paid it means there will be a predicted shortfall of £60,290,904 for the hundreds of small firms and individuals in the supply chain.
In addition, Midas’ housing arm Mi-Space (UK) Ltd owes more than £12m with more than £10m of claims unlikely to be paid. This means the overall Midas deficit is now north of £70m.