Thousands have lost their jobs after the UK division of global construction giant ISG entered administration. EY, the joint administrators, confirmed on Friday that around 2,200 workers were made redundant immediately.
ISG, owned by US firm Cathexis, had been facing financial difficulties for some time. Despite attempts to secure a rescue deal, 200 employees will remain to help with the winding down of the company, which holds over £1 billion in government contracts. ISG’s private sector clients in the UK include major names like Apple, Barclays, and Google.
In an internal email widely reported on Thursday, ISG CEO Zoe Price informed staff of the administration filing, expressing regret over the way the news had leaked. She confirmed that staff would still receive their pay on Monday and explained that the company’s collapse was due to “legacy issues” tied to large, loss-making contracts from 2018 to 2020.
Despite being profitable this year, these older contracts severely impacted liquidity, leaving ISG unable to continue operating. Price also noted that significant efforts to sell the business had been unsuccessful.
EY announced on Friday that none of the potential buyers for ISG were able to demonstrate they had the necessary funds to keep the business operational in the long term.
“We want to clarify for employees, suppliers, and customers that a sale could not be completed because the prospective purchaser, despite multiple requests, failed to provide proof of the funding required to recapitalise and sustain the business,” the firm said.
All eight branches of ISG’s UK operations, including its engineering and retail divisions, have now entered administration. The collapse has resulted in the immediate redundancy of most of the company’s 2,400 UK employees, and all ongoing projects have been halted.
ISG was working on 69 government projects worth over £1 billion, including contracts with the Ministry of Justice for prison refurbishments, according to data from Barbour ABI. The company was also responsible for constructing the velodrome for the 2012 London Olympics.
Ed Griffiths, chief analyst at Barbour ABI, noted that these projects, including a £300 million extension to the Grendon and Springhill prisons in Buckinghamshire, represent “just the tip of the iceberg,” and expressed concern over the impact on the many subcontractors involved.
A government spokesperson, however, assured that contingency plans were already in place, and affected departments were working to secure the sites.