Merit Holdings entered administration and left more than £17m in unpaid bills despite posting multimillion-pound profits months earlier – it employed hundreds of people
A UK construction company plunged into administration despite posting multimillion-pound profits months earlier.
Merit Holdings went into administration in November and left £17.4m in unpaid bills – as well as hundreds of employees out of work. Merit, headquartered in Northumberland, had 284 people on its payroll when it entered administration.
The extent of the financial exposure was revealed by a report from administrator Interpath, which assumed control of Merit Holdings in November. Interpath said it was “highly unlikely” that unsecured creditors would recover any money owed to them.
The firm had seemed to be in good financial health. Results for the year to June 20 2025 showed turnover of £79.7m, delivering a pre-tax profit of £4.3m.
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The business was established by former chief executive Tony Wells and had built a strong reputation in the offsite and modular construction industry.
The administrator’s report said 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 said: “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 showed 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 showed Kirsty Wells established two additional firms in November, Blaze Technology and Newco MHL Ltd, coinciding with the commencement of the administration process. Interpath’s report did not suggest wrongdoing.
