Thursday, 02 October 2014

Contractor's subsidiary goes into administration

A subsidiary of contractor Kinetics Group has been wound up and another has gone into administration.

The Royal Courts of Justice chancery division decided to wind up the company’s DC Group, which provides social housing repairs and maintenance, at a hearing on Wednesday morning. Seaflame, a subsidiary providing gas installation services has gone into administration. Zolfo Cooper has been appointed as administrator.

The winding up petition was brought by HM Revenue & Customs. It is understood HMRC was owed around £7 million by DC Group.

Seaflame held six contracts worth around £9 million, while DC Group’s turnover had plummeted in recent years from around £15 million to £3 million. DC Group was the subsidiary providing work under a contract with Liverpool Mutual Homes, which is being terminated in August seven months early because of concerns about performance.

Nick Murphy, business development director at Kinetics, said the six contracts will be novated to new companies created as part of a restructure of the business, if clients consent. A total of 20 companies will be replaced by three businesses called Kinetics North, Kinetics Midlands and Kinetics South. Kinetics will focus on facilities management, gas compliance and renewable technologies but will reduce its construction work.

He said the group had lost business because it had not submitted low bids in order to win work.

He said: ‘We are very disappointed for the loss to the group of DC and Seaflame.

‘We did not follow the market by bidding for work at any cost.’

Kinetics problems first surfaced in January after it moved to secure £2 million of funding from private equity firm Sovereign Capital to cope with supply chain restrictions. This was followed the same month by the loss of the LMH deal.

In March Hyde Group terminated a £3 million, 15,000-home gas servicing contract with Kinetics following concerns about performance.

Readers' comments (14)

  • Fear & Loathing

    It's a bit like dominoes, this housing maintenance business.

    Right, who's next.

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  • This one looks like it has been on the cards for a long time if you follow the links to related articles. Kinetics lose contracts with Hyde and LMH through poor performance, lose funding from Prudential and have to have £2 million ploughed in recently to try to help it survive. I fear this may not be the last we hear of this company being in trouble, I see from their website that they employ over 1000 people and I wonder how many are about to lose their jobs!

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  • Just spotted this comment at the end of the "contractor Kinetics in £2m cash call" story
    Techno Dave, as you did not see either the Rok accounts or the administrators notes then you could not know (I did). This is nothing like that and in a years time you can buy me a pint as Kinetics will still be here and keeping over 1000 people employed and contributing to the economy which is my sole aim and I am proud to be able to do so.
    Techno Dave, you should be claiming your pint from Mr Cheshire very soon.

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  • The Democratic Dictator

    Most contractors have a slump in performance somewhere down the line, but not all contractors submit low bids to win work and remain in operation.

    This social housing maintenance business is like a double edged sword...damned if you do, damned if you don't... just like a housing officer trying to help a social housing tenant!!!

    Is this irony?

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  • Think of the people losing their jobs, down to bad management by the board at Kinetics who were too far removed. The Northern businesses were their cash cows and they have destroyed good businesses by poor management. Before they purchased these firms they got through two previous recessions with hardship but we kept going successfully. Kinetics went too big, too fast and undoubtedly has taken all the money out of the North to support its other struggling outfits who were suffering from poor cash flow. I feel incredibly sorry for all the dedicated staff who have lost their jobs today.

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  • It is a very sad day.
    Businesses that were built years ago from nothing into viable well respected Company’s within their industry have been stripped bare and left on the scrap heap. Genuine hard working members of staff with numerous years’ service have been betrayed and lied to, now they are the scapegoats for Senior Management failings that have cost innocent people their livelihoods. My heartfelt wishes go out to all those who have lost their jobs today. I hope certain members of staff are looking at themselves today, those that crawled away.

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  • Emile you are right about the destruction of companies. These people running Kinetics have so little Idea of what the operational realities are. They think a new IT system and a rebrand somehow contribute to a better company. Even the shut down has been appalingly handled. Apparently everyone was told to report to Kinetics HQ and that that they were being made redundant and would meet the administrators. Surprise surprise there were no administrators just lots of angr staff and SMT members who were either hiding in their offices or repeating that redundancies would soon follow. Hours later emails were circulating stating that Redundancy did not apply and staff would be TUPE transferred to the new Kinetics. A sort of sickly Phoenix staill sitting in the smouldering ashes as it were.

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  • Chris

    Don't worry guys, as so many posters state - you know the market faith cultists - you are so much better off in the private sector.
    The efficiencies and better management will ensure that jobs are secure, services better and cheaper, and shareholders wallets even fatter (well 1 out of 3 is the best you can expect!)

    My sympathies to all the fellow workers under stress and in danger. None of this is your fault, it is simple 'good' business to bleed the life out of a service, cash the public cheques, then do a runner with the profits, set up another company and do it all again. Market Capitalism - don't you just love it!

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  • js you are incorrect they all reported to HQ to be told if your name is called out you are redundant, here is the forms claim back of the governmant. The day to day side of Kinetics were being TUPE over to LMH anyway.

    Mrs Lord. Were you part of Lords itself or is that a coincidence? I worked for Cameron for years and it was a cash cow!!!

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  • Stephen Dean you are clearly not exactly a well informed "Deep Throat" so to speak. at least three groups of engineers and some admin staff attended at different times yesterday in the morning and the Administrators did not arrive until PM. Anyway, moving on, there were clearly substantial losses at DC group the Seaflame Holding Company who were also subject to a winding up order. Where Severeign Capital fully aware of all this when they presumably carried out some sort of due diligence after buying the Yorkshire Bank debt. Maybe the money just fell down the back of the settee! Looking on the bright side maybe the Kinetics Business Develeopment unit can give a rebate as the turnover plummets.

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