A British company specializing in offsite construction, which had previously reported significant profits, has gone bankrupt, leaving subcontractors and suppliers with outstanding debts totaling £17.4 million and causing hundreds of employees to lose their jobs.
The financial situation was revealed in a recent report by Interpath, the appointed administrator of Merit Holdings. The report indicates that unsecured creditors are unlikely to recover the money owed to them.
Merit, based in Northumberland, had around 284 employees at the time of entering administration, all of whom have been laid off. Despite appearing financially stable in its latest accounts, with a turnover of £79.7 million and a pre-tax profit of £4.3 million for the year ending June 30, 2025, the company faced insolvency.
Following the administration process, a significant asset sale was agreed upon with a related party for £396,000. The assets were acquired by a new company called Merit Industrialised Construction Ltd. Cash flow issues arose due to project delays and disputes with key customers, leading to the engagement of Interpath Limited in July 2025.
As financial pressures mounted, Merit Group Services received a winding-up petition from HMRC, prompting the directors to appoint administrators in November. The company’s directors were associated with the newly established Merit Industrialised Construction Ltd during the asset sale.
Additional documents show that one of the directors established two new companies, Blaze Technology and Newco MHL Ltd, around the same time as the administration process began. While no wrongdoing is suggested in Interpath’s report, it paints a grim picture for creditors, particularly unsecured suppliers and subcontractors facing substantial financial losses.