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A British offsite construction firm, which reported multimillion-pound profits just months ago, has entered administration. This leaves subcontractors and suppliers facing £17.4m in unpaid debts and hundreds of employees jobless.

The scale of the financial fallout has been revealed in a new report from administrator Interpath, which took control of Merit Holdings in November. According to Interpath's proposals, it is "highly unlikely" that unsecured creditors will recoup any money owed to them.

Merit, based in Northumberland, had as many as 284 staff on its books when it went into administration, all of whom have now lost their jobs, according to Chronicle Live.

Despite the sudden collapse, the company appeared to be financially sound based on its most recent filed accounts. The results for the year ending 30 June 2025 showed a turnover of £79.7m, yielding a pre-tax profit of £4.3m.

The business was founded by former CEO Tony Wells and had earned a solid reputation in the off-site and modular construction sector.

However, the administrator's report reveals that following the start of the administration process, a "substantial disposal of assets" was agreed with a connected party for £396,000.

According to the documents, the buyer was a newly formed firm called Merit Industrialised Construction Ltd. The paperwork states: "The group experienced cash flow pressure largely due to delays in the commencement of large projects and disputes on agreeing contract variations with certain key customers.

"Faced with short-term cash flow pressures and longer-term funding requirements, the group engaged Interpath Limited on July 30, 2025.

"On 29 August 2025 Merit Group Services received a winding up petition from HMRC, with a court date for this petition set at 15 October 2025. The court granted a six-week adjournment of this petition to allow a solution to be found for the group.

"The business reached its overdraft limit in early September 2025, with the group receiving a temporary increase of £500,000 from the bank to help meet payroll. In an effort to improve the cash position, the group pursued a settlement agreement on contract variations with a key customer, however an agreement was not reached.

"On 14 November the directors concluded that there was no realistic prospect of a solvent solution being achieved and resolved to appoint administrators."

Companies House records show that Kirsty Wells, Matthew McGrady and David Wilkinson, who were directors of Merit Holdings, were simultaneously serving as directors of Merit Industrialised Construction Ltd at the time of the deal. Furthermore, records show that Kirsty Wells set up two more companies in November, Blaze Technology and Newco MHL Ltd, at the same time as the administration process began.

Whilst Interpath's report doesn't suggest any wrongdoing, it does underscore the grim prospects for creditors, with unsecured suppliers and subcontractors now preparing themselves for significant financial losses.