The property repair and maintenance firm Connaught is expected to go into administration today after failing to secure funding to cover £220 million debts.
Connaught, the social housing property repairs company with almost 10,000 employees, has suspended its shares trading, and is expected to formally go into administration later today.
A large amount of Connaught's business is in the social housing repair, maintenance and improvement (RMI) sector, which is expecting to see severe cuts in public sector funding after the results of the government's spending review are announced next month.
In a statement yesterday, Connaught's board said it was "saddened to announce that it is in the process of appointing partners from KPMG as administrators of Connaught and its subsidiary, Connaught Partnerships, which comprises its social housing division."
It added that its other main subsidiaries, Connaught Compliance, National Britannia Holdings, Fountains and Connaught Environmental are not being placed into administration, and "will continue to trade normally".
In June this year, after the government's Emergency Budget took place, Connaught released a trading update indicating that the public service spending cuts would impact 31 of its social housing division contracts, wiping £80 million off its revenue stream. Despite that, at the time the company said it believed its medium-term outlook "remained strong", since it had "agreed the terms of a short-term overdraft facility".
In yesterday's statement, however, the company said it believed the funding it needed from its lenders to continue operating would "not be forthcoming".
Further announcements are expected later today.