Too early to predict impact of collapse on city Vaux site
Administrators says it is too early to predict what impact the collapse of North East construction giant Tolent will have on the redevelopment of Sunderland’s Vaux site.
The Gateshead firm has been on site since 2018 and was appointed in June to lead construction of 135 “ultramodern” houses as part of the ‘Vaux neighbourhood’ at the Riverside Sunderland development, the first of around 1,000 homes planned for the site.
It was also responsible for creating a new Sunderland Housing Innovation and Construction Skills Academy at Sheepfolds, run by Sunderland College, which would train people train people in the techniques required to erectnewfactory-builthomes – the first of which would be assembled at the Riverside site.
But Tolent and its five subsidiarieshavenowcalledinadministratorsJamesLumband HowardSmithfromInterpath Advisoryafterrunningintofinancial trouble.
The group has been hit by challenges including the risingcostsofrawmaterials,supply chain issues, material and labour shortages, and the collapse of a number of developers, contractors and supply chain partners.
One of its major contracts – the £85.5million Milburngate development in Durham – has become ‘significantly loss-making’, which has had a serious impact on its working capital.
Administratorshavemade 313 of the group’s around 400 employees redundant immediately, with another 91 retained while they explore any possibilityofasaleofthebusinesses and their assets.
JamesLumbsaidadministratorswerein‘activedialogue’ in an effort to find developers that may be interested in continuing construction projects for both Tolent Construction and Tolent Living.
“Tolent is one of the most well-known construction firms in the North East, havingbeeninvolvedinlandmark projects including Riverside Sunderland, the Hadrian’s Towerresidentialschemeand the £85.5million Milburngate development in Durham,” he said.
“However, like many businesses across the UK’s building and construction sector, thegrouphasbeenbattlingsevereheadwinds,includingspirallingcosts,labourshortages and also the loss of other companieswithinitssupplychain, all of which unfortunately resulted in one of its major contractsbecomingloss-making. “Following the tapering off of the Government’s Covid support schemes, and in the wake of recent economic volatility, access to finance has tightenedformanycompanies across the sector. This means many building and construction firms are finding they have fewer options available to them to help deal with any liquidity crisis.
“Additionally, after the annual Christmas shut-downs and a cold December, the months of January and February
often bring with them a painful cash crunch. In a sectorwhichtypicallyoperateson wafer-thin margins, this can oftenprovetobeinsurmountable,andunfortunately,sohas been the case for Tolent.”
“Ourpriorityinthecoming days is to work with key stakeholders to assess options for eachofthecompanies,including options for ongoing contracts and live projects.
“We will also be providing support to those employees who have been impacted by redundancy.”