Affordable housing provider Lovell has paid £28 million for the ongoing contracts and related assets from Connaught plc.
Connaught Partnerships went into administration on Wednesday 8 September, after failing to secure funding to cover outstanding debts of £220 million. The company had lost 90% of its share value since June 2010.
Lovell, owned by construction and regeneration group Morgan Sindall Group plc, said the acquisition would "allow essential maintenance services to continue without interruption". Around 2,500 employees connected with these ongoing contracts will transfer to Lovell as part of the agreement.
A total cash consideration of £28 million has been paid for the assets.
Lovell said the new contracts are expected to generate approximately £200 million of additional annual revenue, split broadly between response maintenance contracts and Decent Homes, planned maintenance contracts.
Earlier this year, Lovell acquired Powerminster Gleeson Services, transferring all existing contracts to Lovell Respond, the company’s national housing maintenance business.
Meanwhile, law firm Thomas Eggar LLP has warned that Connaught's collapse may have"widespread ramifications for the construction industry", according to associate Frank Bouette.
Bouette said that other, smaller contractors who were employed by Connaught to "to do the groundwork on outstanding projects may find themselves fighting to safeguard their own future".
He has also advised them to review the "termination and protection clauses" within the contracts they had with Connaught to see if they can recover any stock and goods supplied.
Mark Clinton, a partner at Thomas Eggar, added: "If they have credit insurance, contractors should also speak to the providers of that insurance about whether or not it will pay out. Of course, the availability of such insurance has been very restricted in recent times."