Harland & Wolff, the shipbuilder behind the Titanic, was in debt to the tune of more than £160m when it fell into administration last month, as per recent revelations.
Teneo took charge of the process at the 162 year old holding company in September, while its subsidiary companies, including its esteemed Belfast shipyard, will persist under the director’s control, as reported by City AM.
A document recently filed with Companies House has detailed the circumstances leading to the company’s fall into administration and the extent of its debts to creditors.
According to Teneo, at the time of their appointment, neither the group nor its lender could provide long-term funding to cover the company’s ongoing expenses.
They further stated: “The [Harland & Wolff] sites were largely acquired by the group from insolvency processes and their success was predicted on securing significant revenue growth t support a large overhead base.”
“While the group achieved revenue growth, it was slower than necessary and a recent substantial contract win was not anticipated to turn profitable in the near future.”
“Consequently, during 2024 the group faced an escalating short-term liquidity requirement along with a significant amount of creditor arrears.”
Why did Harland & Wolff enter administration?
Harland & Wolff sought financial assistance from the Department of Business and Trade and UK Export Finance, as well as from its secured creditor.
This funding was needed by 1 July, 2024, to address its liquidity shortfall and enable the signing off and timely filing of statutory accounts.
In a recent turn of events, the Government has rejected an application for funding support from Harland & Wolff, leading to the suspension of the firm’s shares from AIM due to outstanding accounts.
Subsequently, Harland & Wolff appointed Rothschild & Co to spearhead a sale of the business.
Teneo, addressing the financial strain on the company, stated: “Liquidity pressure in the company was increasing with an imminent threat of a winding up petition being presented by a creditor.”
The advisory firm continued, outlining the untenable nature of the company’s overheads: “Furthermore, the company’s cost base was considered to be unsustainable.”
“Given the absence of any new funding, the directors of the company concluded that they had no alternative but to appoint Gavin Park and Matthew Cowlishaw as joint administrators of the company.”
How deep was the company’s debt?
As stated in Teneo’s statements, the company owed its principal secured creditor approximately $210.1m (£161.9m).
The company informed that, according to available data, it is unlikely that the proceeds from asset disposals will cover the debts fully.
In addition, roughly 48 ordinary preferential claims are estimated to total about £130,800, tied to accrued and unused vacation time, which Teneo believes should be paid out completely from the sale proceeds.
It is also facing claims from 75 unsecured creditors, who have estimated non-preferential claims amounting to nearly £1.2m.
Teneo has warned that the overall claims could escalate once further details are known.
Sadly, they predict its improbable that any funds will be left for the unsecured creditors.