The collapse of ISG: supply chain implications

With the collapse of ISG, what implications does this have for businesses in the supply chain?

ISG, the sixth largest construction business in the UK, fell into Administration on the 20 September 2024. 

The company’s UK operations, which provided construction and related services in the UK, have ceased to trade with immediate effect, with all of its 2,200 workforce being made redundant. 

As a result, no further work will be undertaken on existing UK contracts, including its Engineering, Fit Out and Construction services.

Legacy issues

ISG’s Chief Executive announced that the situation had arisen due to legacy issues relating to large loss-making contracts secured between 2018 and 2020. Attempts to find a buyer for the business were unfortunately unsuccessful.

With revenues of approximately £2.2bn, ISG’s demise will undoubtedly be far reaching as projects are brought to a halt, employees are made redundant and significant bad debts hit those throughout the supply chain. 

The Administration could result in a number of businesses falling victim to the domino effect of insolvencies, where the loss of a major customer and significant bad debt creates liquidity challenges throughout the industry.

What can you do if you’re affected?

We regularly deal with businesses who have been impacted by failure elsewhere. 

Some of these businesses will properly address their challenges and survive, often with independent input, but sadly others will fail as their resulting cashflow difficulties prove too challenging to rectify.  

The principal consideration for anyone impacted by the above therefore has to be “how does this affect my business, and how do I react?”. 

Depending on the severity of the impact, you will need to understand and assess the reality of the situation so that you can make informed decisions going forward in order to protect your own business and move forward more robustly.

Bad debt

For instance, if you have been left with a significant bad debt, you might then struggle to discharge your own creditors and meet costs in the short term. Similarly, if ISG or its subsidiaries was a key customer of yours, you will need to consider how revenue is replaced and margins are maintained in the longer term, if that’s even possible.

We can help you plan ahead with confidence:

1. We will assess the financial impact on your business. We can prepare detailed cashflow forecasts and financial models as part of this if necessary
2. We will advise on the financial position of your business, and once this and its cashflow requirements are clear, we can provide an objective analysis of your options for the future. We can also advise directors on their personal obligations
3. The options available will take various forms depending on the severity of the impact on your business. For instance, you might need to raise funds to address a cashflow deficit, or you might need specific restructuring advice to safeguard the future of your business

Aside from that, you should ensure that your interest in the Administration is properly represented.

You will have an opportunity to claim in the Administration and provide information which might help the Administrators to maximise the pot for creditors.

Making your voice heard

As Insolvency Practitioners ourselves, we can help to make sure your voice is heard by reviewing and responding to any insolvency paperwork on your behalf, representing you at creditors’ meetings, and identifying any potential issues relating to the conduct of the Administration in the interest of maximising your recovery.

Contact us

If you have been negatively impacted by the position of ISG or the failure of another business in your supply-chain, our Restructuring Team would be pleased to speak with you on a no obligation, no cost basis initially.