'Too early' to predict impact of Tolent collapse on Sunderland's Vaux site development, say administrators

The Gateshead firm has been on site since 2018 and was appointed in June to lead construction of 135 “ultra-modern” houses as part of the ‘Vaux neighbourhood’ at the Riverside Sunderland development, the first of around 1,000 homes planned for the site.

It was also responsible for creating a new Sunderland Housing Innovation and Construction Skills Academy at Sheepfolds, run by Sunderland College, which would train people train people in the techniques required to erect new factory-built homes – the first of which would be assembled at the Riverside site.

But Tolent and its five subsidiaries have now called in administrators James Lumb and Howard Smith from Interpath Advisory after running into financial trouble.

More than 300 redundancies

The group has been hit by challenges including the rising costs of raw materials, supply chain issues, material and labour shortages, and the collapse of a number of developers, contractors and supply chain partners.

One of its major contracts – the £85.5million Milburngate development in Durham – has become ‘significantly loss-making’, which has had a serious impact on its working capital.

Administrators have made 313 of the group’s around 400 employees redundant immediately, with another 91 members of staff retained while they explore any possibility of a sale of the businesses and their assets.

James Lumb said administrators were in ‘active dialogue’ in an effort to find developers that may be interested in continuing construction projects for both Tolent Construction and Tolent Living.

“Tolent is one of the most well-known construction firms in the North East, having been involved in landmark projects including Riverside Sunderland, the Hadrian’s Tower residential scheme and the £85.5million Milburngate development in Durham,” he said.

“However, like many businesses across the UK’s building and construction sector, the group has been battling severe headwinds, including spiralling costs, labour shortages and also the loss of other companies within its suppy chain, all of which unfortunately resulted in one of its major contracts becoming loss-making.

“Following the tapering off of the Government’s Covid support schemes, and in the wake of recent economic volatility, access to finance has tightened for many companies across the sector. This means many building and construction firms are finding they have fewer options available to them to help deal with any liquidity crisis.

Support for staff

“Additionally, after the annual Christmas shut-downs and a cold December, the months of January and February often bring with them a painful cash crunch. In a sector which typically operates on wafer-thin margins, this can often prove to be insurmountable, and unfortunately, so has been the case for Tolent.”

“Our priority in the coming days is to work with key stakeholders to assess options for each of the Companies, including options for ongoing contracts and live projects.

“We will also be providing support to those employees who have been impacted by redundancy, including providing them with the guidance and information they need to be able to make claims from the Redundancy Payments Office.”