Nearly 40 firms owed £100,000 or more by collapsed Midas as unsecured creditors face millions in losses

The scale of the losses facing Midas’s subcontractors and suppliers has been laid bare in an administrators’ report which shows that nearly 40 firms are owed at least six figures by the collapsed firm – with one contractor looking at a black hole in its accounts of more than £600,000.

Nearly 1,800 unsecured creditors have been told they won’t be getting any of their money back, the report by Teneo Financial Advisory warned. “We do not anticipate that sufficient funds will become available to enable any payments to be made [for unsecured creditors].”

Exeter-based Midas sank into administration earlier this month owing unsecured creditors £22.5m with administrators saying the firm, which was set up in 1976, suffering a “rapid deterioration in trade from November 2021 to January [this year] as the group was unable to pay subcontractors to complete ongoing works”.

The report said unsecured creditors of the group’s biggest division, construction, were owed £19.3m covering 1,400 firms, with its property arm Mi-Space – the £34m turnover business sold to Bell Group for a knockdown £230,000 in a pre-pack sale – owing more than 300 creditors a further £2.5m. A separate debt of £300,000 was owed to unsecured creditors of the group and its retail arm.

One concrete frame contractor is facing a loss of more than £625,000 following the collapse of Midas’s construction business with several others each owed north of £300,000.

The report said Midas, which employed 365 people at the time of its failure, had a provisional turnover of £223m in the year to last October – down from the £259m it reported in its last 12 month reporting period for the year to April 2019.

It added: “The business was severely impacted by the pandemic during FY20 which resulted in periods of closure for the business and adjusted operating conditions upon re-opening.

“The group also faced inflationary pressures within its cost base, including higher labour and material costs.”

It said delays on jobs meant that in the year to last October it suffered “significant working capital and cash challenges”.

Teneo’s report added the Midas directors were pinning their hopes for a recovery on the collection of money they said the firm was owed.

“The group had a large balance of disputed debts that the directors considered was a route to reducing the cashflow challenges if the debts could be collected in a reasonable timeframe. We understand that reports to the board during the period from July 2021 to November 2021 indicated a realistic prospect of collecting material sums that would have had a significant benefit in clearing creditor backlogs and improving productivity on site, albeit this was ultimately not achieved.”

Midas brought in financial consultant Deloitte last November to run the rule over the business ahead of a possible sale but Teneo’s report said “there was no interest in purchasing the group on a solvent basis” which meant its bank, Lloyds, did not renew a £5m overdraft facility which had already been extended twice from the end of last year to 28 January – triggering the firm’s decision to file a notice of intention to appoint an administrator.

The report said sole secured creditor Lloyds will get the £1.3m it is owed back while 44 employees of Midas Group, who are preferential creditors, are also likely to get £91,000, comprising of missing wages, holiday pay and pension payments, back as well.

But a further 223 staff, mainly from the construction business, who are owed nearly £400,000 between them in missing wages have been warned they might not get their money back.