Hull construction specialist Kingston Modular Systems collapsed following a dispute with a dissatisfied client who withheld more than £585,000, a report shows.
The company, which had been trading for nearly a decade from its factory and offices at Sutton Fields Industrial Estate in Hull, fell into administration in September, with 62 jobs lost when a last-minute rescue attempt failed.
Established in 2016 by directors Carl Galbraith and Kris Robinson after their previous employer went into administration, the company earned its reputation designing and manufacturing modular buildings and luxury park homes for the healthcare, education and leisure sectors. During the pandemic, it also played a significant role in combating coronavirus by delivering new hospital wards to the frontline, including the construction of a 28-bed Covid-19 ward which was dispatched to London in April 2020.
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However, during the summer, the company sought advice from Westgates Restructuring due to cash flow problems. Frazer Ulrick, from Westgates Restructuring in North Ferriby, was appointed as the administrator for the business, explaining that a decrease in demand, along with a bad debt, had precipitated his appointment.
Fresh documentation now reveals Kingston Modular Systems went under owing £1.7m, leaving unsecured creditors facing losses of £1.5m. The analysis details how the business - which employed 100 staff and achieved £17m turnover during its 2023 peak - handled substantial contracts with bespoke customer specifications that were vulnerable to major project scheduling delays, reports .
According to the documentation: "The company experienced a downturn in trading in the year to 2024 due to delays in securing orders on some major projects. In addition, the revenue generated from the leisure industry decreased from £6m in 2023 to £2m in 2024 as demand decreased and foreign holidays returned following the Covid 19 restrictions."
The business made 30 staff redundant during that period, reducing its workforce to 70, whilst also obtaining £400,000 in investment, though this "was not sufficient to ensure its long term future".
However, the fatal blow came in July when the company received legal correspondence from a client alleging Kingston Modular had violated contractual terms, according to the documentation. The unnamed customer stated it would deduct what it claimed were its expenses from another contract, whilst refusing to honour a £585,000 payment obligation.
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Kingston Modular's directors challenged this position and "have responded a number of times via their appointed solicitors", though the administrator notes they were denied the chance to address any defects or additional concerns that were raised. The administrator stated in his report: "As a result of this non-payment, the company's invoice financing facility provider froze the facility. This has caused significant cashflow issues resulting in them no longer being able to pay debts as and when they fell due."
Efforts were made to locate new proprietors, with documents revealing that 22 potential buyers initially expressed interest. Ultimately, however, only a single joint bid was submitted by two firms, which was rejected by the administrator.
A revised offer was never presented, causing the deal to collapse and leading to the company's closure.