Insider Media Limited

The impact of three contractors withholding payments worth £3m contributed to the demise of historic Manchester building services company Barratt, according to a new report.

The family-owned mechanical and electrical contractor, which could trace its roots back to 1935, entered administration on 29 November 2011 with the loss of 43 jobs. It ceased trading a few weeks later after administrators from Duff & Phelps failed to find a buyer.

A report from the administrators has now revealed that "three large contractors" submitted Withholding Notices amounting to £3m for ongoing and completed work prior to the administration. This, coupled with the withdrawal of a series of photovoltaic solar contracts, put serious pressures on cashflow.

Duff & Phelps said that despite a series of cost-cutting measures, which included redundancies, the business had become unable to pay its debts and as when they fell due and was therefore declared insolvent.

Barratt's only secured creditor HSBC was not owed anything at the time of the administration, but non-preferential creditor claims will total about £3.7m. Employee claims total £489,000, while HM Revenue & Customs is owed £690,000.

Sub contractors and suppliers will bear the brunt of the collapse, however, with claims amounting to more than £2m. The administrators said it is possible that there "may be sufficient realisations" to enable a distribution to the non-preferential creditors.

Barratt has been in the same family since it was established and has worked as a mechanical and electrical contractor on a string of commercial, retail and large scale residential jobs around the country. As well as a contract on the Channel Tunnel, it has enjoyed success in China, Singapore and Australia.

S Barratt & Co (Manchester), which trades as Barratt, reported a turnover of £16.2m in the year to 31 December 2010, down from £18.8m a year earlier. The business also slipped to a pre-tax loss of £1.3m, down from a profit of £431,000 in 2009.