Administrators from insolvency specialists FRP Advisory and Lucas Ross have taken charge of the affairs of Surgo Construction Limited and made 46 staff redundant.
The collapse of Surgo comes just a year after the failure of Metnor Construction, also from Newcastle, and Tolent in neighbouring Gateshead.
Bellway Home issued a winding up petition against Surgo on 19th February.
Surgo Construction’s most recent accounts show turnover of £14.4m in the year to 31st October 2022, with a pre-tax profit of £75,000.
Surgo’s projects included Bede 6th Form College, Dame Allan’s School and South Tyneside Council’s South Shields Crematorium refurbishment.
Lucas Ross posted on social media its explanation for what went wrong for the company.
“Surgo lost an adjudication with a supplier, Roundel Manufacturing Limited, in relation to the supply and installation of kitchens for a development for Bellway Homes. Surgo was ordered to pay over £180,000 to Roundtel, which it assessed on a ‘true value’ valuation.
“Roundtel assigned their rights to the ultimate customer, Bellway Homes, who then took Surgo to court seeking a summary judgement. Surgo lost and the court awarded summary judgement leading to Bellway seeking to petition for the winding up of the company.
“Sadly, this led to Surgo's financial woes culminating in its administration, signalling a dramatic turn of events for the company and its employees. The announcement has left many shocked and saddened, with employees now facing an uncertain future following their redundancy days before it fell into administration.”
Joint administrator Stephen Lancaster from Lucas Ross added: “Surgo's administration serves as a stark reminder of the fragility of success in today's economic climate, highlighting the unpredictable nature of the construction industry and the challenges faced by businesses within it”.
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