Connaught, one of the UK’s largest developers of social housing, is set to enter administration according to the BBC.
BBC business editor Robert Peston has said that the group will make an announcement later today (Tuesday).
The group, which has a market capitalisation of more than half a billion pounds, is one of the UK’s leading providers of social housing – and therefore a major force in the housing market.
There has long been concern that a combination of over-ambitious financial planning and impending public sector cuts would wreak havoc on the social housing sector.
Connaught has lost or deferred more than 30 contracts as a result of provisions made in the government’s initial Budget announcement.
Aside from the potential impact on the housing sector, the collapse of Connaught has serious psychological implications for the markets as a whole. A very small number of floated companies have folded as a result of the recession, and Connaught looks set to be one of the highest profile casualties.
There is further concern that Royal Bank of Scotland, which is Connaught’s major lender, may suffer major losses if the group collapses.
The group currently employs around 10,000 people, and is running almost quarter of a billion pounds of debt.
