Work stops on £7.5million hotel for Sunderland after builder’s collapse

Work has stopped on the new Premier Inn, on St Michael's Way, in Sunderland city centre.
Work has stopped on the new Premier Inn, on St Michael's Way, in Sunderland city centre.
  • Administrators called in as firms suffer cashflow problems
  • Contractor could be left £200,000 out of pocket
  • Police and security guards turned away workers
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WORK on Sunderland’s new £7.5million Premier Inn has ground to a halt after the collapse of the builder.

And one city businessman says he is facing ruin after GB Building Solutions and parent company GB Group Holdings called in administrators yesterday.

Steve Lynn of SJL Brickworks says he is owed thousands after the collapse of the firm building the Premier Inn.

Steve Lynn of SJL Brickworks says he is owed thousands after the collapse of the firm building the Premier Inn.

Steve Lynn, who runs North East Business and Innovation Centre-based SJL Brickwork, says he could be left £200,000 out of pocket for work on the Hind Street site and another project in Newcastle.

“This will virtually wipe me out,” he said.

Company bosses had been working with business specialists BDO in an attempt to save the business, but have now appointed them as administrators.

Other parts of the wider GB group are not affected so far.

I am not a big contractor, I am Sunderland born-and-bred – this will virtually wipe me out.

Steve Lynn, SJL Brickwork

BDO business restructuring partner Tony Nygate said the companies had experienced trading and cash-flow issues in recent months, including three substantial claims on contracts.

Efforts to raise funding had failed, leaving no choice but to put the businesses into administration.

“The companies experienced a serious deterioration in their working capital position and as a result were unable to continue to operate

“Regrettably, it has been necessary to make all employees redundant, save for a small number to assist the administrators.

“The Joint Administrators are actively seeking purchasers for all or part of the business or assets, and going forward, our priority will be to maximise recoveries for the creditors.”

Steve Lynn said workers had been locked out of the site after Wednesday evening’s announcement.

“On the Thursday, some people turned up for work as usual and got turned away by the police and security guards because the site had been locked down,” he said.

“Some of them still have equipment on site.”

Steve, who had 10 workers on site, had completed the original contract, but was asked to take on more work on the outside of the hotel and the listed former Gas Board building, which is also being restored as part of the project.

“We finished the main hotel, but they just kept throwing the work at us for the externals and the Grade II-listed building,” he said.

“I am not a big contractor, I am Sunderland born-and-bred – this will virtually wipe me out.”

Premier Inn spokesman Richard Aldread said the firm remained committed to the Sunderland project, which would see it take on a lease for the building from GB Building Solutions’ sister company, GB Development Solutions.

“We are looking forward to opening a new Premier Inn in Sunderland City Centre and bringing new investment and jobs to the city,” he said.

“Regrettably, the developer’s principal contractor has ceased operations, so there will be a short-term delay as new arrangements are put in place for completing the build.

“We will be working closely with the development team and funders to do everything we can to get construction back on track, and to open the new hotel as soon as possible.

“More information on a revised timetable will be made available as soon as possible.”

Prospective purchasers or creditors with enquiries can contact the Administration team by email at gbgroup@bdo.co.uk.