Interserve’s ill-fated foray into building incinerators has been cited as a major factor in the company’s collapse with £480m of debt.
Administrator EY was appointed on Friday in a pre-pack administration, under which Interserve’s business and assets were sold to a specially formed new company which will trade under the name Interserve Group.
EY said that although the original Interserve company was insolvent, Interserve Group was not and would be in business effectively under the ownership of lenders but with the previous shareholders’ value wiped out.
Joint administrator Hunter Kelly said: “This transaction secured the jobs of 68,000 employees, the majority of whom work in the UK, as well as ensuring there was no disruption to the vital public services that Interserve provides to the Government.”
EY’s statement singled out Interserve’s troubled energy-from-waste (EfW) projects as a cause of the original company’s plight.
It said: “The company has been suffering from much-publicised issues from losses on certain legacy construction contracts, in particular in the EfW sector.
“It has also had difficulties collecting monies due in the Middle East as well as securing new work due to its heavily indebted balance sheet.”
Shareholders voted down a rescue plan last Friday, leading to the insolvency and creation of Interserve Group. It remains unclear whether all or parts of this, including the incinerator contracts, will be put up for sale.
Interserve has said it wants to exit the EfW market and is working only on finishing some contracts. It warned in 2017 that the costs of problem EfW deals would “significantly exceed” £160m.