Top contractor heads for collapse, leaving doubts over major projects

Following months of speculation about the company’s financial future, six UK subsidiaries of the £2.2 billion contracting giant, including its main ISG Construction arm, lodged court applications yesterday afternoon (19 September).

In an email sent to its 2,400 staff last night confirming the administration, ISG chief executive Zoe Price confirmed that offices would be closed, sites would not open and that all subcontractors would be stood down.

Among the schemes on ISG’s books are the £32.7 million restoration and redevelopment of Birmingham’s Moseley Road Baths, overseen by Donald Insall Associates; the £70 million Regents Quarter offices-to-labs project at King’s Cross by Piercy&Company; and the £44 million conversion of Coventry’s former IKEA store into an arts and culture centre by Buttress.

According to industry tracker Glenigan, ISG’s workload includes 34 contract awards, as well as 45 schemes on-site – two imminently set to complete – worth a combined total of £4.15 billion.

One of ISG’s most significant projects is the £281.6 million Queen Square Institute of Neurology and UK Dementia Research Institute for the University College London, designed by Hawkins Brown. The development in Grays Inn Road was set to complete in early 2025.

The six companies that have applied for administration are: ISG Construction Ltd, ISG Engineering Services Ltd, ISG Jackson Ltd ISG Retail Limited, ISG UK Retail Ltd and ISG Central Services Ltd.

According to the most recent filed accounts for ISG Construction covering the year ending 31 December 2022, the company had an income of £545 million and made a profit of £3.2 million. ISG Retail had posted a turnover of £551 million and a profit of £28.2 million over the same period.

In July, the AJ’s sister title Construction News reported that the group was very near to being sold by its owner, Texas-based Cathexis Holdings.

But rumours about the company struggling to pay its subcontractors have circulated for months. In November last year, ISG was forced to deny what it called ‘wholly inaccurate’ rumours about its financial health, following delays to two of its most high-profile jobs: Britishvolt’s £3 billion gigafactory and the £700 million Sunset Waltham Cross film studio complex.

Earlier this week, one of its suppliers, Alandale Logistics, filed its own winding-up petition against ISG Engineering Services Ltd.

ISG and the architects on the schemes mentioned above have all been contacted for comment.

A spokesperson for Birmingham City Council, the client behind the Moseley Road swimming pool, told the AJ: ‘We are aware that ISG Ltd, our main contractor for the Moseley Road Baths Diving In project has notified us of their intention to appoint a receiver. Where requested, we will work closely with the receiver over the coming days.’

A spokesperson for Coventry City Council, which is funding the Buttress-designed City Centre Cultural Gateway, said: ‘We understand ISG Construction has applied to enter administration, and we have contacted partners involved in our project as we consider our next steps.‘