Building firm crashes with loss of 130 jobs (From Gazette & Herald)

Building firm crashes with loss of 130 jobs

A building firm whose turnover was said to have doubled to £8 million last year, has hot the rocks with 130 jobs lost.

Russell Construction, based in a converted barn in Fold Walk, Buttercrambe, near Stamford Bridge, was last year predicting that it would reap £10 million in turnover in 2006 and £20 million by 2010 - but now it has gone into voluntary administration.

The firm steadily increased turnover as it concentrated on residential and commercial property schemes in North and West Yorkshire, Lincolnshire and the North East. Last year it created 75 new jobs.

Its managing director, Stuart Ede, is said to have sought desperately to refinance the business when its overdraft was withdrawn, but in vain. At first he announced 80 job losses after Christmas, and then the remaining 50 workforce was made redundant last month.

Neither Mr Ede, nor his wife, Deborah, a fellow director, were available for comment.

But Mike James, the finance manager, who was in the building gathering data for Kroll's corporate advisory and restructuring group, the administrators, said: "It came as a big blow to a lot of people, including myself.

''We weren't expecting it. We thought that we would be refinanced more quickly, but the creditors got there first.

''Staff were told on the day the administrators came in.

''Many of us were shocked. I get the impression that we grew too rapidly. These things happen, but it is a tragedy."

David Newton, of the accountancy firm David Newton & Company, which handled the Russell Construction books, said they were successful, but were "overtrading" and the bank called in their overdraft.

"We were looking at changing banks, but the pressure of cashflow forced them down the route of making redundancies. Since then, we have had three or four meetings cancelled by them (Russell Construction), and we were out of the loop."

The firm was formed as Russells Building Contractors by Melvin Russell, Mr Ede's father-in-law, in1990. But after he resigned following ill health, Mr Ede took over as managing director in 2001.

Debbie Haywood, of Leeds-based administrators Kroll, confirmed that the company had gone into voluntary administration.

"The main creditor was Lloyds TSB. We are still assessing the firm's finances and level of debt and a creditors' meeting has yet to be arranged," she added.

Bob Maxwell, one of the Kroll's partners, appointed joint administrator, also blamed overtrading and cash flow difficulties for the crash.

He said that due to the nature of the group's debts it was not possible to put in place any strategy to rescue the business as a going concern, and the remaining 50 employees had been made redundant.

"We are currently investigating opportunities to sell the outstanding contracts and collect in book debt monies to secure the best possible outcome for creditors," he said.

Updated: 10:01 Wednesday, February 01, 2006