What happened
BTG administrators David Hopkins and Paul Stanley have set out the position in their first progress report to creditors of FK Group Ltd, according to Construction News. The cross-guarantee covers amounts due to two subsidiary businesses, FK Facades Ltd and FK Construction Ltd.
A statement of affairs included with the report records £11.8m owed to unsecured creditors. The administrators said the funds available would not support a distribution to that group of creditors. HSBC is identified separately as a secured creditor.
Investments and the proposed sale
The statement of affairs puts the book value of FK Group Ltd's investments in subsidiaries at £17m. Their realisable value is uncertain. The recorded investment figure therefore does not establish how much money those holdings will bring into the administration.
An unnamed connected party has agreed to sell FK Resolv, another subsidiary of FK Group Ltd. The administrators linked the prospect of a dividend for HSBC to completion of that share sale. Their report does not present the transaction as completed.
FK Resolv specialises in building facades. Companies House records show that it remains active, Construction News reported, and its website remains available. The business is too small to be required to file full accounts.
The administrators said they would give creditors further information about the transaction in their next progress report if it completes. They did not name the connected party in the information reported by Construction News.
The background to the collapse
FK Group Ltd, FK Facades Ltd and FK Construction Ltd entered administration in February. The businesses cited inflationary pressures following Covid among the challenges behind the collapse.
The group had operated since 1979. Before its failure, it had ranked fourth among building envelope businesses in the CN Specialists Index.
Its last accounts covered the year to 31 March 2024. They showed turnover of £100.6m, a fall of 23 per cent, alongside a pre-tax loss of £5.9m. Those accounts describe the group's financial performance before the administration, rather than the value available from its assets now.
In April, the administrators disclosed that legal disputes had cost the group £3m in fees before its collapse. Construction News reported that figure as part of the earlier information released about the failure.
Enquiries into the UAE holding
The progress report also addressed FK Construction LLC, an entity based in the United Arab Emirates. FK Group held an indirect 49 per cent stake in that business. It is a separate entity from FK Construction Ltd, one of the companies that entered administration.
Hopkins and Stanley said enquiries were continuing into whether the UAE business was dormant and whether the shares had any realisable value. At the time of their report, they had received no interest in buying the holding. Its potential contribution to creditor recoveries therefore remained unresolved.