Administrators for Surgo Construction are continuing their examination of asset transfers made by the company before its collapse, amid mounting creditor concerns.
The investigation by FRP Advisory and Lucas Ross, covers asset transfers, ownership claims, director conduct, and Surgo’s financial accuracy leading up to its administration in March 2024.
Surgo’s administrators confirmed the company had sufficient reserves at the time of the property transfers, but are now questioning discrepancies between the price stated at the Land Registry and the actual distributions.
This follows Surgo losing a dispute with Bellway Homes in a Technology and Construction Court case in February 2024, just a month before the company entered administration.
The Newcastle-based contractor was ordered to pay Bellway £1.1 million related to the recovery of alleged overpayments made during the interim stage of a project, despite initial legal advice suggesting the company was “likely to be successful” to win the dispute at the time of the property transfers.
Administrators added investigations are ongoing into the timing and onset of the company’s insolvency, as well as the actions taken thereafter, with the “appropriate course of action” to recover any shortfall for the benefit of creditors.
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In addition to the property transfers, administrators have also faced challenges in asset realisation, spending “considerably more time” than expected managing contractual claims, leased asset returns, and employee-related issues.
As Surgo transitions from administration into a creditors’ voluntary liquidation (CVL), only preferential creditors, including HMRC and employees owed wages, will receive payment.
Unsecured creditors, however, such as subcontractors are facing significant losses amounting to more than £3.3 million.
This is in addition to the £1.1 million owed to Bellway Homes.
Despite initial hopes of recovering £125,000 from client contracts, administrators of the company, which once commanded sales of £55 million at its peak, have so far only managed to recover £3,000.
Six of Surgo’s contracts have been confirmed as having no “realisable value”, potentially adding to unsecured creditor claims once final valuations are completed.
Two contracts, worth a combined £1 million-plus, may still be recoverable, while six others are under review, with a high-end estimate of £400,000.
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