Page last updated at 19:01 GMT, Tuesday, 10 March 2009

Building firm in administration

Wrekin Construction offices
Companies are complaining that credit is harder to get

Shropshire-based Wrekin Construction Group has gone into administration, threatening up to 600 jobs.

The firm said it blamed Royal Bank of Scotland (RBS) for its predicament because the bank would not extend credit to cover cash-flow problems.

RBS said Wrekin was unsustainable due to "creditor pressure".

Wrekin, which also has bases in Yorkshire, Northamptonshire and Cheshire, said it had millions of pounds worth of orders.

Building workers' union Ucatt said a healthy company was failing because banks would not lend.

"There is a particular problem with the banks bailed out by government cash not passing it on to construction companies. This must be the last example of this problem," said Alan Ritchie, general secretary of Ucatt.

Winding up

Wrekin said it had an overdraft facility of 4.25m and was overdrawn by 2.8m. Winding up petitions, however, meant that the account was frozen.

"The current order book up to to the beginning of March 2009 was 40m for the calendar year," a statement from Wrekin said.

"As a result of this administration, the taxpayer may have to make redundancy payments of 2.5m and there will be the ongoing unemployment costs for more than 500 employees.

"All Wrekin Construction needed to keep going in a very competitive market was 2m to 3m," it added.

'Creditor pressure'

RBS said it had worked with the Wrekin Group to help them resolve their financial difficulties.

"We have given very careful consideration to their situation and regrettably concluded that the business was unsustainable due to the extent of creditor pressure," an RBS spokesman said.

Mark Pritchard, Conservative MP for the area the firm is based in, said Wrekin Construction had been forced into administration because of RBS's "inflexibility" in releasing funds.

Wrekin also has subsidiaries in Staffordshire and Scotland.

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