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Constructors facing insolvency after credit lines removed

Fundraising - Tue 3 Mar, 2009 14:30:15

More and more UK construction firms are facing insolvency as lenders withdraw credit facilities, Contract Journal has reported.

A study by Roland Berger Strategy Consultants found that 44 per cent of overdrafts have been taken from companies, which many were relying on as a safety net during the recession.

As the risk of insolvency grows, many organisations may look to services such as secure virtual data rooms, which can accelerate the sale of assets in a controlled online environment.

Restructuring and turnaround partner at Roland Berger, Klaus Kremers, told Contract Journal: "Construction companies are being deserted by banks on the one hand and by customers on the other.

"This is diverting the focus of many perfectly viable firms away from improving sales and profits and onto avoiding insolvency."

He added that credit was often "vital lifeblood" of companies and was being "progressively eroded".

One of the latest casualties of the recession is the commercial property group KW Linfoot, which fell into administration last week after failing to secure new lending facilities.ADNFCR-1221-ID-19054622-ADNFCR