‘It’s devastating.’ Boss of collapsed M&E firm Lonsdale speaks about administration

The former managing director of Michael J Lonsdale has told Building rumours the firm was sunk by a particular job or contractor are not true, adding that instead the company was felled by a combination of events including inflation and a waning credit rating.

Gary Herbert joined the business 18 months after it was set up by Michael Hoodless – the Lonsdale takes its name from the maiden name of Hoodless's wife – in 1986.

"It was 37 years of work," Herbert told Building. "I wouldn't wish what's happened on anyone. It's devastating."

The firm collapsed into administration two weeks ago sending shockwaves across the industry before rumours began to circulate the company had been laid low by a problem contract or was owed money by a contractor.

But Herbert said: "I've heard silly things that people owed us £30m. That's not true. It's a culmination of events. It wasn't a particular job or contractor, that's the truth."

He added: "We've had a 25 year relationship with a lot of contractors. It's a horrible feeling [what's happened]."

Building understands several firms had recently put Lonsdale on accelerated payments but Herbert declined to confirm names.

He said rising inflation and other high-profile administrations had damaged its credit rating, which the firm had first referencedin a letter sent to staff announcing the firm's administration. "The credit rating [issue] is a big one for everyone," he told Building.

One rival admitted the number of administrations this year, such as those at Tolent, Buckingham and Henry Construction, had  spooked insurers.

"Can subcontractors get insurance for someone up the chain? If they can't, then you're dead because they won't work for you. If the credit rating is bad, the insurers think 'we have nowhere to go if this goes wrong'. It's a big problem at the moment."

Several firms including Mace, ISG and Overbury have since taken on former Lonsdale staff which numbered around 300 at the time of its collapse.

Lonsdale's rollcall of jobs includes Multiplex's 22 Bishopsgate tower and Mace's UBS building at Broadgate while more recently completed schemes include Lendlease's 8 Bishopsgate tower and the Lucent building at Piccadilly Circus built by Wates. Current jobs included the 21 Moorfields scheme, where ISG is carrying out fit-out work, while it was about to sign up for Overbury's Citibank refurbishment in Canary Wharf at the time of its collapse.

Several contractors have admitted Lonsdale at the top of their go-to M&E contractors and Herbert, who said he had received "dozens" of messages of support following the administration, admitted: "We did a lot. My wife got bored of me pointing out all the stuff we worked on. To me every job was the best job whether it was £50,000 or £50m."

Begbies Traynor was appointed administrator with the firm set to file a statement of proposals by the middle of November.

Source; Building.com