A UK-based prefabricated construction company that recently reported significant profits has entered administration, resulting in subcontractors and suppliers being owed £17.4 million and leaving hundreds of employees jobless.
The financial situation was detailed in a new report by Interpath, the appointed administrator of Merit Holdings. Interpath’s report indicates that it is improbable for unsecured creditors to recover their outstanding debts.
Merit, based in Northumberland, had 284 employees when it went into administration, with all staff members losing their jobs. Despite its apparent financial stability as per its latest accounts, which showed a turnover of £79.7 million and a pre-tax profit of £4.3 million for the year ending June 30, 2025.
Founded by former CEO Tony Wells, Merit had a strong reputation in the offsite and modular construction sector. However, following the administration process, a significant asset sale for £396,000 was agreed with a related party, Merit Industrialised Construction Ltd, a newly formed company.
Cash flow challenges arose due to project delays and contract disputes with key clients, leading to financial strain. To address these issues, Interpath was engaged on July 30, 2025, before Merit Group Services faced a winding-up petition from HMRC in August, resulting in a court adjournment to seek a resolution.
With cash flow further impacted in September, the company sought a temporary overdraft increase to meet payroll obligations. Despite efforts to negotiate contract variations with a major client, an agreement was not reached, culminating in the appointment of administrators on November 14.
Directorship overlaps were revealed between Merit Holdings and Merit Industrialised Construction Ltd, involving Kirsty Wells, Matthew McGrady, and David Wilkinson. Kirsty Wells also established Blaze Technology and Newco MHL Ltd during the administration process.
While no wrongdoing is suggested in Interpath’s findings, the report underscores a challenging situation for creditors, particularly unsecured suppliers and subcontractors facing significant financial losses.