Wrekin had credit insurance pulled before it collapsed

The withdrawal of credit insurance contributed to the collapse of Wrekin Group, according to sources familiar with the situation.

In addition to five winding-up petitions and more than 10 county court judgements, the Shropshire contractor had its insurance cover pulled due to concerns over its credit rating.

As a result suppliers to the company would have either stopped trading or significantly reduced payment times.

The withdrawal of credit insurance underlines comments made by the group’s banker RBS, which said the business was “unsustainable due to the extent of creditor pressure”.

Local Conservative MP Mark Pritchard blamed the collapse of the company on the inflexibility of RBS. He said the bank had not been willing to ease the firm's short-term cash flow despite the company having an order book worth tens of millions of pounds.

He said: “These were avoidable job cuts. The government is the majority shareholder in RBS but they have taken no action to save these jobs despite being alerted to the fact there were cash flow problems.”

Earlier this year RBS pulled the plug on another Midlands business – Pettifer Group.

An RBS spokesman denied there was any connection between the two.

He said: “Each case is judged on its own unique terms.”

Last month Building revealed that more construction and property companies have had their overdrafts cut than any other sector of the economy. The study by strategy consultant Roland Berger revealed 44% of construction and property firms have had unused credit cut compared to a pan-industry average of 34%.