Hallam collapse proves cash is king

One of Leicestershire’s best-known building firms has recently collapsed. Hallam Contracts went into administration last week after managers failed to keep the business alive as it finally succumbed to cash flow problems caused by the tough economic climate.

The final straw came when sub-contractors added their debt onto a winding-up petition submitted at Manchester County Court on October 24 by another creditor; finance firm Bibby Factors who were attempting to secure around £8,000 owed to companies it represents. With the addition of the debts owed to the contractors the amount owed by Hallam Contracts to creditors increased substantially to around £500,000.

The directors of Hallam were left with little option but to break and sell off parts of the business by putting it into administration and this has led to speculation that the management could eventually buy back part of the business and begin re-trading.

Hallam’s collapse will come as a surprise to many people as the news comes a week after it collected an award at the Leicestershire and Construction (ProCon) Awards.

It just goes to show that no matter how many contracts you have on your books (it is estimated that Hallam were working on 50 schemes at the time) or how good your reputation is, cash is king and cash flow problems can be terminal.

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