Administration of NMCN plc

According to press reports, utilities contractor NMCN (formerly North Midland Construction) plc and its subsidiary NMCN Sustainable Solutions Limited, have gone into administration.

Administration is the procedure by which a company that is, or is likely to become, insolvent can be reorganised or have its assets realised for the benefit of creditors. The primary aim of an administration is to rescue the company so that it can continue to trade as a going concern. If this is not possible, a company may go into administration for two other purposes:

• to achieve a better result for the company’s creditors as a whole than would be likely if the company were put into liquidation; or
• to realise the company’s property to make a distribution to the company’s secured or preferential creditors.

One of the consequences of NMCN going into administration is that an automatic moratorium will prevent creditors from bringing or pursuing legal proceedings against the company or its assets. It is possible to ask the administrators or the court for permission to bring proceedings against the company, however, a creditor with a monetary claim is unlikely to be granted permission. Some of NMCN’s employers may also seek to terminate or withhold payment, which could have a real impact on sub-contracts and sub-consultancy appointments.

As a first step, it is important for sub-consultants and sub-contractors to check:

• the terms of their appointment with NMCN;
• whether it is possible to suspend or terminate their services;
• whether it is possible to suspend or terminate any licence of intellectual property – this can be a useful negotiating tool with the administrators; and
• whether NMCN’s contract with its employer permits the employer to make direct payments to subcontractors in the event of insolvency.

We understand that Helen Dale, Nigel Morrison and Jonathan Roden of Grant Thornton UK LLP have been appointed Joint Administrators of NMCN.

If you are a consultant or a contractor and would like advice on the consequences of NMCN’s administration, its impact on a current contract or how to best protect your position, please contact James Hutchinson.