Payment problems on a series of contracts and an upstream insolvency have forced the RTT Group and its subsidiaries into administration.

M&E contractor RTT Group has been forced to call in administrators Price Waterhouse Coopers following payment problems on numerous large-scale contracts.

RTT Engineering Services has now reformed as RTT Services Group, RTT Maintenance and Special Projects has been closed down and Mechelec Engineering Services has been sold by the administrators to a management team.

Surrey-based RTT Group, with a turnover of £40 million, has fallen foul of poor payment practices. It has been left owed substantial payments on a major PFI hospital project, and also come up against upstream insolvency: in December 2004 the firm was owed £431 000 when fit-out firm Benson collapsed.

RTT Group fell into receivership on 17 March. Some 17 jobs are said to have been lost by the enforced closure of RTT Maintenance and Special Projects. However, RTT Services Group has purchased its assets and live jobs from the receivers and saved 300 jobs. The firm will continue to chase retentions and final payments owed to the RTT Group.

All jobs at RTT Group subsidiary Mechelec Engineering Services have been saved through the management buyout by long-term employees David Wilkinson and Andrew Lawrence. "The new company, Mechelec ÐÇ¿Õ´«Ã½ Services, has engaged all operatives previously employed and will continue to complete most of its current contracts [on behalf of the receiver]," said director Andrew Lawrence. The firm has already secured a number of new projects.

The most recent figures available for RTT Group, the accounts for the financial year ending December 2003, reveal that the firm made a pre-tax loss of £900 000 for the year. However, they also reveal that it was owed £11.6 million.

This situation will renew calls by specialist contractors' groups for payment practice and upstream insolvency to be tackled by government in its review of the Construction Act.

RTT Group was bought back by the management team, including original founder and chair Trevor Koch, from its former parent, Israeli company Electra, in December last year. Electra took a 62% stake in RTT for £2.2 million in July 2001.

Source

Electrical and Mechanical Contractor