Northern Ireland constructor's £11.3m debts won't be paid after takeover
Creditors of Northern Ireland construction firm McMullen Facades who are owed a total of £11.3m will not be paid after it went bust before being bought over, it has emerged.
Small firms across the province are owed money, including a Belfats forklifts firm which was due nearly £8,000 and a Co Antrim powerwashers with an outstanding bill for £580.
The purchase of the business and assets of McMullen Facades makes it likely the name will no longer be linked with the glass trade after nearly five decades.
It started out as a glass business founded by Edward McMullen in 1971. The firm was then taken over by his son Ted, who moved into glass facades.
McMullen Facades was then acquired by Lakesmere Group in England five years ago.
An administrators' report on McMullen Facades, which was based in Moira, said 400 unsecured creditors were owed money, including a German manufacturer owed £2.1m.
Administorators Deloitte sold the business and assets to UK construction giant JRL two days after it went into administration.
It describes how the company name was bought - with the result that the name of the failed firm had already been changed to MFL Realisation 2017.
McMullen Facades had been one of the UK's best-known facade contractor, working across Chester, Leeds and London. In Belfast, it worked on landmark buildings including The Boat office and apartment developmentand the Obel building.
While the firm had its base in Moira, it also opened a factory in Portadown, while its head office had been in Winchester in England since its earlier takeover by Lakesmere Group.
However, Lakesmere went into administration on November 2 - though at the time administrators Deloitte said McMullen would continue to trade.
The administrators' report details that in its most recent statutory accounts McMullen Facades reported sales of £37.3m and earnings before interest and tax of just under £1m.
The report remarks: "The company (McMullen) was profitable and had a strong net asset position. Unfortunately due to the group funding arrangement, it could not support its own cash position and was therefore insolvent on a cash flow basis."
According to Deloitte's report, the Lakesmere group had been subject to a management buy-out in 2015, which brought in more debt. Group performance then began to decline due to poorly-performing contracts, which needed to be funded.
A shareholder injected £2m into the business - but the situation continued to deteriorate, and more funding was needed later in the year. Secured lender HSBC agreed to back a plan for a turnaround. But the shareholder refused to inject more money into the business without a guarantee of repayment. However, the directors couldn't go on and agreed with HSBC that the firm should be put in adminsitration.
"This meant that due to the group funding arrangement... the company needed to stand alone on a cash basis. This was not possible given the level of creditors in the company," the report stated
And on November 15, McMullen Facades was told a creditor had filed a winding-up petition. "The company directors attempted to seek agreement to the withdrawal of the petition. However, their proposals were rejected," the report added.
The company was placed into administration on November 17.
McMullen Facades had already been marketed for sale and five offers were made. Administrators once appointed then continued to negotiated and reached a deal with JRL on November 22.
The report said sales proceeds of £2m had been reached following the sale to JRL.
The buyer has been granted licences to occupy its three properties and is to agree new leaseholds with the landlords.
A secured creditor owed £23.1m has only received £1.25m. But the report said unsecured creditors are unlikely to receive any money. All its 270 employees have been transferred to JRL.
The company's name has now been changed to JRL Unitised Facades.