Opinion: Hallam collapse is proof cash is still king
I should have known better. The day after saying I hoped there would be fewer job losses in the run-up to Christmas, there were more than 100 redundancies as one of Leicestershire's best-known building firms collapsed, writes Business Editor Ian Griffin.
Hallam Contracts, of Oadby, went into administration last week after managers lost their battle to keep the business afloat as it hit cash flow problems brought on by the tough economic conditions.
It seems the group, which has ceased trading, was the victim of "piggy-backing", where creditors – in this case sub-contractors – add their debt onto a winding-up petition submitted by a business.
These petitions are aimed at breaking up and selling off firms as part of a bid to get back money which is owed.
Finance firm Bibby Factors submitted a winding-up petition against Hallam at Manchester County Court on October 24 in a bid to secure around £8,000 owed to companies it represents. Other creditors then joined in, increasing the amount being sought to about £500,000.
The directors of Hallam were left with no option but to put the business into administration to ensure an orderly restructuring of the beleaguered business, which had been working on 50 schemes.
It has left many speculating that the management could eventually buy back part of the business and re-start trading.
Hallam's collapse took many business leaders in the county by surprise. After all, the company had only collected an award at the Leicestershire and Construction (ProCon) Awards the week before.
It highlights no matter how many contracts you have won, how good your reputation is and how many awards you win, cash is still king and running out of it can be devastating.