Cramlington-based construction firm Merit, along with several of its subsidiaries, has entered administration, resulting in the loss of over 300 jobs. The company, a former North East Company of the Year, was one of the º£½ÇÊÓƵ's leading modular building firms and had been involved in numerous significant healthcare and business projects.
Merit was in the process of constructing the new Berwick Infirmary in Northumberland, but administrators have halted all operations, leading to the redundancy of most of the company's 340 employees. The administrators are currently seeking a resolution for Merit's customers, employees, and creditors.
James Lumb and Will Wright from Interpath were appointed as joint administrators to Merit Group Services Limited, Merit Health Limited, and Merit Holdings Limited this week. This appointment followed contractual issues and delays to several of Merit's major contracts, which significantly affected cash flow.
Earlier this year, the company faced two separate winding-up petitions, both of which it successfully defended against. However, a third petition from HMRC reportedly negatively impacted new work awards and caused delays to several projects, prompting company directors to explore options for sale, refinancing, and other investment.
When it became apparent that a solvent solution was unattainable, the decision was made to seek the appointment of administrators, reports .
James Lumb, managing director at Interpath and joint administrator, said: "The º£½ÇÊÓƵ construction industry continues to face tremendous headwinds, with rising costs, high interest rates and subdued private sector demand having an impact on larger contracts in particular. Although Merit has developed an outstanding reputation for the quality and innovation of its specialist offsite solutions, these broader challenges proved to be insurmountable."
He added: "We continue to explore options in order to find a solution that works for Merit's customers, employees and creditors. In the meantime, we are prioritising providing support to all those who have been affected by redundancy, including supporting them with claims to the Redundancy Payments Service."
The most recent accounts for Merit Group Services - parent company to 16 firms within the Cramlington-based group - covering the year ending June 2024, revealed turnover declined from £88.4m to £79.7m, whilst operating profit dropped from £7.9m to £6.3m. The group had substantially enlarged its facilities at the Nelson Industrial Estate in Cramlington during 2021.
In addition to its work on Berwick Infirmary, the firm was also constructing a Medicines Manufacturing Centre in Seaton Delaval.
A spokesperson for Northumbria Healthcare NHS Foundation Trust said: "Northumbria Healthcare has been made aware that Merit has now been placed in administration. This continues to be a very unfortunate situation, and we appreciate that this will be a very difficult time for all involved.
"We are now able to put the robust plans we have in place to ensure construction work continues to progress on the Berwick Community Hospital. We would like to reassure people that we are going to do everything we can to complete our new hospital as soon as we can and we know that everyone is keen to know when it will open.
"We appreciate that everyone is keen to know when our new hospital will open, but it is difficult to provide a firm timescale at this time. We will provide an update as soon as we can."
