Construction Company collapses with £25m in debts

Northeast construction firm Merit collapsed with debts of £25m, documents show

Around 300 jobs were lost after Merit Holdings and Merit Health went into administration towards the end of 2025

Northeast construction firm Merit collapsed with a total deficiency of £25.7m, new documents show. Around 300 jobs were lost after Merit Holdings and Merit Health went into administration towards the end of last year, having worked on major healthcare and projects in the life science, education, battery technology, and aerospace industries all over the UK.

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The failure of the former Northeast Company of the Year, a leading UK modular building company, followed cash flow issues and a squeeze on its finances after a winding up petition was served by HMRC, and amid a failed bid to seal an agreement with a key client over a contract.

Specialists at Interpath had been seeking a solution for Merit’s customers, employees and creditors before joint administrators were finally appointed in November to Merit’s companies – Merit Group Services Limited, Merit Health Limited and Merit Holdings Limited. All works had by then ceased on projects they were involved in, including the Berwick Community Hospital and Seaton Delaval’s Medicines Manufacturing Centre.

Fresh documents filed by the administrators now show that “a substantial” disposal of certain assets was made to Merit Industrialised Construction Limited, a connected party to the group, a month after the administration, on December 19. The newly formed company has four directors including Merit chair Kirsty Wells, the ultimate beneficial owner of the purchaser, and its major shareholder is London-based Modulex Modular Buildings Plc. The business was bought for initial consideration of £396,000 plus VAT, and deferred consideration of at least £500,000.

The report also says that Merit’s original founder, Tony Wells, will become a director and shareholder of Merit Industrialised Construction Limited, which has initial equity investment of around £900,000 from shareholders.

Group assets bought as part of the £896,000 deal include the customer contracts, the customer works in progress with some exclusions, the shares, the intellectual property and the goodwill, the stock with some exclusions; plant and equipment; and equity in any leased plant and equipment. It also includes a licence to occupy at Silverton Court and at Factory 2, and an option to buy the factory when the licence expires for £6.86m.

Meanwhile, the 74-page document lists 11 pages of creditors, including supply chain firms all over the UK. Merit Holdings has an estimated total deficiency of £25.7m, including £16.8m owed to unsecured creditors.

Unsecured creditors’ claims add up to an estimated £17.4m, and administrators it is “unlikely” they will get any of their money back.

Source: Chronicle Live