The administration of collapsed mechanical & electrical (M&E) specialist MechFS has been extended again due to an ongoing dispute on a large construction contract worth millions, making the prospect of a dividend payout to creditors “uncertain”.
Founded in 2008, Doncaster-headquartered Mechanical Facilities Services Limited (MechFS) went into administration in April 2022, citing a dispute on a large job abroad and resulting cash flow pressures among its troubles.
Three years later, the most significant remaining asset in the ongoing administration process is book debt, the largest outstanding of which, due from MechFS GmbH, is worth £5.5 million.
However, its collection is dependent on the outcome of a legal claim on a former construction project in Germany, whose contractor also entered administration earlier this year.
In an administrators’ progress report, covering the period between April and October this year, Interpath Advisory warned that claim is also “likely to be disputed”, adding any financial recoveries could end up being spent on a potential settlement, after all.
However, Interpath has no control over that process and merely awaits updates from the director of MechFS GmbH.
It is understood lawyers in Germany have said the dispute could take between nine and 18 months to resolve as it works its way through the court system – hence the extension.
“In more complex cases, particularly those involving disputed claims or delays in asset realisation, this timeframe may extend to two years or longer,” administrators said.
“This may lead to further delays in the recognition and realisation of the claims within the insolvency proceedings.”
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And while preferential claims could be £121,306 from former employees for arrears of wages and holiday pay etc, Interpath said while the large book debt remains outstanding, it is ‘unlikely there will be sufficient funds for a payout’ to certain creditors, as they sift through the remaining assets of MechFS.
The courts have therefore granted a 24-month extension of the administration process, which is now due to end on 4 October 2027.
At the time of its collapse, Mechanical Facilities Services Limited had achieved revenue of more than £50 million.
“We continue to pursue a large outstanding book debt due from MechFS GmbH, collection of which is dependent upon settlement of a legal claim,” administrators said.
“Based on current estimates, it is uncertain whether there will be sufficient funds available in the administration to enable a dividend to be paid to the ordinary preferential creditors.
“This is dependent on the level of book debt realisations achieved in the administration, which is currently uncertain.
“We have continued to review the affairs of the company to find out if there are any actions which can be taken against third parties to increase recoveries for creditors.”
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