Around 100 jobs are set to be lost at Hull-based offsite construction specialist ESS Modular following its immediate closure due to significant financial struggles.
The city firm has ceased operations, with insolvency professionals from EY-Parthenon's Turnaround and Restructuring Strategy team stepping in. They have cited substantial losses on legacy contracts as the cause of the liquidity issues, Business Live reports.
ESS and Spatial Initiative - which was acquired in 2020 - is linked to failed contractor ISG via shared parent company Cathexis.
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EY says that the majority of the 100 employees across the companies will face redundancy but assured that those affected would receive the necessary support and advice.
Administrators have acknowledged the continued financial backing from shareholders despite recent losses; however, they stressed that a "material" injection of additional funds was required to maintain operations. Attempts to secure this funding were unsuccessful, prompting the directors to appoint EY.
Most recent accounts for ESS, for the six months to the end of 2022, show significant operating losses of £14.5m and net liabilities of £16.7m. Within the documents, directors pointed to "acute" market uncertainties and extraordinary levels of inflation. They said the "continued impact of underlying factors including project delays, investment in overheads, supply chain administrations and project designs, on legacy projects" were among the challenges.
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Bosses described 2023 as a "transition" year, during which the company would adapt to a new strategy and complete outstanding projects. Despite implementing various cost-cutting measures, the group expanded its UK manufacturing capacity and was reportedly well-placed to increase its market share "at a time of significant demand for efficient, sustainable modular approaches to public sector real estate projects".
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In August, ESS was selected as one of six suppliers for a Government framework to deliver 16,000 living spaces for military personnel over six years. The company was chosen by the Defence Infrastructure Organisation, a Ministry of Defence arm, to provide accommodation for Royal Navy, Royal Airforce, Army, and Strategic Command forces.
This week, Tim Vance, Charles King, and Andrew Dolliver from EY-Parthenon's Turnaround and Restructuring Strategy team were appointed joint administrators of Extraspace Solutions (UK) Limited. Additionally, Tim Vance and Charles King were appointed joint administrators of Spatial Initiative Limited, a wholly-owned subsidiary of Extraspace Solutions (UK) Limited.