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ABI comments on latest in a row of construction company failures

Longcross Construction’s notice to appoint administrators follows on from several construction company administrations this year, including Anglo Holt, GB Group Holdings and GB Building Solutions Limited. This announcement highlights the need for firms to protect themselves against the financial problems of a trading partner.

Mark Shepherd, Manager of General Insurance, ABI, said:Mark Shepherd

“Yesterday’s announcement that Longcross Construction has appointed administrators is the latest in a number of high-profile announcements that large construction firms have stopped trading or been placed in administration this year.

“This latest administration puts a number of major construction projects in jeopardy and provides a stark reminder about the vital role trade credit insurers play in protecting businesses from the knock on effects that can be caused by the unexpected insolvency of a trading partner.

“Trade credit insurers provided more than £16 million of cover for goods and services supplied on credit to Longcross Construction Ltd. This means their suppliers will have the protection of credit insurers to replenish the loss incurred. Without this insurance in place, many more companies would be at risk of large financial losses, and potentially further job losses.

“Trade credit insurance gives businesses security to extend credit to companies they are trading with and improves access to bank funding, which encourages businesses to expand and supports sustainable growth. Credit insurers also work with their customers to help them understand and manage their risk when trading with other firms.”

Last updated 01/07/2016