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Red Flag Alert Gives Early Warning of Brenig Construction Limited Failure

Red Flag Alert Gives Early Warning of Brenig Construction Limited Failure
Jan 16, 2024 Rory Traynor Updated On: January 31, 2024

Brening Construction were a successful construction, developer and civil engineering firm based in Wales that turned over eight figures and enjoyed major contracts with councils and housing groups in North Wales.

Despite this, they unfortunately entered into voluntary administration on 15th December 2023, leaving projects unfinished and creditors left to absorb the bad debts left behind.

Who were Brenig Construction Limited?

Brenig Construction Limited was a construction company that specialised in developing housing estates. They were able to manage projects from start to finish and employed civil engineers, surveyors, architects, project managers, designers, ground workers and environmental experts.

They had enjoyed major contracts from well-known and reputable clients, such as: Tai Wales & West Housing, Adra, Macbryde Homes and several councils. They focused on sustainable and community friendly building techniques and practices.

What pressures did they face?

The UK economy has been an incredibly difficult environment to operate in since 2020 and has become increasingly so in the last two years. The well publicised macroeconomic pressures that have successively challenged our economy led to 2023 seeing record numbers of insolvencies. Some of the major challenges facing businesses were:

· Significant increases in cost of materials

· A significant increase in the cost of energy. Especially to business, which saw a major decrease in government support at the end of March 2023

· Delays in the global supply chain

· Inflation

· Interest rates rises

· Rising levels of bad debt caused by insolvencies

The construction industry has proven the most vulnerable and suffered more insolvencies than any other sector. As more companies fail, the amount of bad debt in an industry rises and increases the level of risk that all companies face. By the end of 2023, the construction industry had around £1 billion of bad debt.

Economic downturns also are usually accompanied by a significant slowdown for demand for construction projects and many construction companies have found it difficult to generate the new business they require to stay solvent.

What went wrong?

Brenig Construction were flagged as in financial distress by Red Flag Alert as early as September 2022.

In the years before its collapse Brening Construction saw decreasing turnover and increasingly showed signs of a company struggling to generate the revenue it needed to survive, which was detected by our cutting-edge algorithm that is based on over two decades of insolvency data and expertise in spotting the early warning signs of business failure.

In the final six months of its existence, Brenig Construction started to show increased signs of immediate collapse. They were subject to 27 CCJs and a winding up petition, which was later withdrawn.

Despite this reprieve, the directors felt that they were unable to continue to operate and voluntarily entered into liquidation in December 2023.

They left over £5.3 million of debts that they had no assets to cover, which their creditors must now try to absorb without failing themselves. Sadly, a company that suffers a bad debt is three times more likely to fail than one who has not, through no fault of their own.

Those companies that used Red Flag Alert had over a year's warning that Brenig Construction was a serious business risk and to seriously consider whether to extend credit to them. At the heart of the reason we were able to identify this risk so early is our understanding of business health and obsession with bringing the data our customers need to market as quickly as possible.

To see how Red Flag Alert will help your business, download our free Brenig Construction Limited Company report below or get a free trial.



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