The staff at GB Group, which is involved in building a new Hilton hotel near Leeds’s First Direct Arena, received the news yesterday.
GB Group Holdings Limited and GB Building Solutions Limited are now in administration with Tony Nygate and Graham Newton of BDO running the company.
BDO said: “In recent months, the companies experienced trading and cash flow issues, including three substantial claims on contracts, which contributed to a deterioration in their working capital position.
“Efforts to raise funding to secure the future of the companies were unsuccessful, leaving no option left but to place them into administration. Regrettably, it has been necessary to make approximately 350 employees redundant.”
Other companies within the wider GB group are not in administration.
BDO business restructuring partner Tony Nygate said: “The companies experienced a serious deterioration in their working capital position and as a result were unable to continue to operate. Regrettably, it has been necessary to make all employees redundant, save for a small number to assist the administrators.
“The Joint Administrators are actively seeking purchasers for all or part of the business or assets, and going forward, our priority will be to maximise recoveries for the creditors.”
On Friday The Yorkshire Post revealed that a taxpayer loan worth £4.8m could be at stake after the developer warned it was heading into administration.
The Leeds City Region Local Enterprise Partnership approved the loan to GB Group in 2013 to help build a Hilton hotel near the Leeds First Direct Arena.
The LEP allocated the public money from its £36m Growing Places fund for projects that create economic and employment growth for the city region.
Announcing the deal in November 2013, the LEP said the 206-room hotel would create more than 100 long-term jobs as well as 370 short-term construction jobs.
The Yorkshire Post and Yorkshire Evening Post asked the LEP what has happened to the funding, what due diligence it carried it before making the loan and what is happening to the hotel project.
A spokeswoman for the LEP said: “Until we have spoken to other lenders involved in the project and had the opportunity to contact and discuss with the appointed administrators, it is premature to offer a comment.”
MJ Gleeson, urban regeneration and strategic land specialist, said it had been notified that GB Group Holdings Limited, in which the Group has a 25 per cent shareholding, has given notice that it intends to appoint Administrators. A spokesman for MJ Gleeson said: “Consequently, the Group’s £4.9m investment in GBGH is now considered to be at risk. The Group’s investment in GBGH was made in 2005 in order to facilitate a management buyout of the Group’s building contracting division. Any subsequent write down will be recorded as an exceptional, non-cash, item in the Group’s results for the current year ending 30 June 2015.”