UK offsite construction firm Merity Holdings has collapsed, leaving subcontractors and suppliers exposed to £17.4m in unpaid bills and 284 jobs lost
A British offsite construction company that posted multimillion-pound profits only months earlier has gone into administration, leaving subcontractors and suppliers facing £17.4m in outstanding debts and hundreds of employees out of work.
The extent of the financial exposure has been laid bare in a fresh report from administrator Interpath, which assumed control of Merit Holdings in November. Interpath’s proposals indicate it is “highly unlikely” that unsecured creditors will recover any money owed to them.
Merit, headquartered in Northumberland, had up to 284 people on its payroll when it entered administration, and all of those staff have lost their jobs, reports Chronicle Live.
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Despite the abrupt failure, the firm had seemed to be in good financial health according to its latest filed accounts. Results for the year to 30 June 2025 showed turnover of £79.7m, delivering a pre-tax profit of £4.3m.
The business was established by former chief executive Tony Wells and had built a strong reputation in the offsite and modular construction industry.
However, the administrator’s documentation discloses that after the administration process began, a “substantial disposal of assets” was agreed with a connected party for £396,000.
The purchasing entity, according to the documents, was a newly established company named Merit Industrialised Construction Ltd. The document says: “The group experienced cash flow pressure largely due to delays in the commencement of large projects and disputes on agreeing contract variations with certain key customers.
“Faced with short-term cash flow pressures and longer-term funding requirements, the group engaged Interpath Limited on July 30, 2025.
“On 29 August 2025 Merit Group Services received a winding up petition from HMRC, with a court date for this petition set at 15 October 2025. The court granted a six-week adjournment of this petition to allow a solution to be found for the group.
“The business reached its overdraft limit in early September 2025, with the group receiving a temporary increase of £500,000 from the bank to help meet payroll. In an effort to improve the cash position, the group pursued a settlement agreement on contract variations with a key customer, however an agreement was not reached.
“On 14 November the directors concluded that there was no realistic prospect of a solvent solution being achieved and resolved to appoint administrators.”
Records held at Companies House reveal that Kirsty Wells, Matthew McGrady and David Wilkinson, who served as directors of Merit Holdings, were also serving as directors of Merit Industrialised Construction Ltd when the transaction took place.
Moreover, documents reveal that Kirsty Wells established two additional firms in November, Blaze Technology and Newco MHL Ltd, coinciding with the commencement of the administration process.
While Interpath’s report doesn’t imply any malpractice, it does highlight the bleak outlook for creditors, with unsecured suppliers and subcontractors now bracing themselves for substantial financial hits.
