Contractor's subsidiary goes into administration

The Royal Courts of Justice chancery division decided to wind up the company’s DC Group, which provides social housing repairs and maintenance, at a hearing on Wednesday morning. Seaflame, a subsidiary providing gas installation services has gone into administration. Zolfo Cooper has been appointed as administrator.

The winding up petition was brought by HM Revenue & Customs. It is understood HMRC was owed around £7 million by DC Group.

Seaflame held six contracts worth around £9 million, while DC Group’s turnover had plummeted in recent years from around £15 million to £3 million. DC Group was the subsidiary providing work under a contract with Liverpool Mutual Homes, which is being terminated in August seven months early because of concerns about performance.

Nick Murphy, business development director at Kinetics, said the six contracts will be novated to new companies created as part of a restructure of the business, if clients consent. A total of 20 companies will be replaced by three businesses called Kinetics North, Kinetics Midlands and Kinetics South. Kinetics will focus on facilities management, gas compliance and renewable technologies but will reduce its construction work.

He said the group had lost business because it had not submitted low bids in order to win work.

He said: ‘We are very disappointed for the loss to the group of DC and Seaflame.

‘We did not follow the market by bidding for work at any cost.’

Kinetics problems first surfaced in January after it moved to secure £2 million of funding from private equity firm Sovereign Capital to cope with supply chain restrictions. This was followed the same month by the loss of the LMH deal.

In March Hyde Group terminated a £3 million, 15,000-home gas servicing contract with Kinetics following concerns about performance.