Torsion Construction went into administration on 29 July with twelve live sites running and growing turnover behind it. The last filed accounts showed £165.4m of revenue and a profit on every line. What the business did not have was cash. Here is how a growing contractor dies with work on the books, what direct payment arrangements did to its working capital, and which warning signals sat in public records five months before the administrators walked in.
Leeds-based Torsion Construction stopped trading this week. James Clark and Howard Smith of Interpath were appointed joint administrators on 29 July, most of the 115 staff were made redundant, and twelve live sites across Manchester, Leeds and Sheffield were left looking for a route to completion.
Here is the part that should bother anyone running a contracting business. Torsion was growing. Turnover for the year to 30 June 2025 came in at £165.4m, up from a restated £117.2m. Operating profit rose to £1.1m, pre-tax profit to £814,155. The firm made the Sunday Times Best Places to Work list. Glenigan had 54 projects associated with Torsion Group listed when the notice of intention was filed, including two £90m schemes in Nottingham and Leeds. There was no shortage of work. There was a shortage of money arriving at the right moments to pay for it.
Growth at half a percent margin is a cash problem in waiting
What the last filed accounts actually showed
£1.1m of operating profit on £165.4m of turnover is a margin of about 0.7%. Pre-tax, nearer 0.5%. The business was pushing roughly £13.8m of revenue through itself every month and clearing, across the entire year, less than two days’ worth of that turnover in profit. A margin that thin leaves no room for a single job to misfire, and Torsion has said several did.
The subtler problem catches faster-growing firms hardest. Revenue growth of 41% does not fund itself. Every new site burns cash on materials, labor and preliminaries weeks before a valuation is certified, never mind paid. A contractor scaling quickly on wafer margins needs more working capital each quarter, not less, and that money has to come from somewhere.
the business’ liquidity ran out of roadJames Clark, Managing Director at Interpath and Joint Administrator
The direct payment paradox
Protecting the client can starve the contractor
Torsion Group’s statement is unusually frank about the mechanism that hurt it. Direct payment arrangements were introduced on several projects. They kept clients protected, kept jobs moving and kept many supply chain partners paid. By the group’s own account, they also cut hard into the working capital the construction arm had left.
Normally, money for a job lands with the main contractor, who then pays subcontractors on their own terms. The gap between those two events is float, and for plenty of contractors that float quietly does the job of a credit facility nobody formally arranged. Switch to direct payment and the client’s money bypasses the contractor entirely. The supply chain gets safer. The contractor funds overheads, preliminaries and every other live site from a much smaller pot. That is not an argument against direct payment, which is often the only thing keeping a wobbling job alive. It is an argument for modeling the effect before you sign, rather than after.
- Float disappears overnight. An informal credit line the business had been leaning on vanishes with it.
- The obligations do not. Head office costs, preliminaries and staff still need paying from a smaller pot.
- It signals distress. Funders and insurers read the arrangement as a sign the contractor cannot be trusted to move money down the chain.
Five months of warning sat in public records
Petitions, notices and a paper trail anyone could read
J H Shouksmith & Sons, an M&E contractor, issued a winding-up petition against Torsion Construction on 23 February 2026. Torsion saw it off. Five months later, on 20 July, the directors filed a notice of intention to appoint administrators. Nine days after that, the appointment went through at Manchester Administrative Court.
None of that was hidden. Petitions get published, notices of intention appear at Companies House, court listings are public. The harder signals never get filed anywhere. Credit insurers quietly pulling cover is a market judgment made months ahead of anything official. Payment slowing from a firm that always paid on the nose is another. So is turnover in senior finance roles, or a sudden appetite for renegotiating settled terms.
A rough market is not what empties a bank account
What the sector data actually says
The backdrop is bleak. The S&P Global UK Construction PMI registered 38.4 in June, barely above May’s six-year low of 38.2 and far beneath the neutral 50 mark. Output has fallen every month since January 2025. House building sat at 35.9, its sharpest decline of 2026, and civil engineering at 22.1, the steepest fall since April 2020.
The insolvency figures cut against the mood, though. There were 3,805 construction insolvencies in England and Wales in the twelve months to June 2026, 17% of all cases where an industry was recorded. Construction stays top of the table, but that number has been drifting down rather than climbing. A weak market makes work harder to price and money harder to raise. What actually empties a bank account is the timing gap between spending and getting paid, applied to a business with no margin to absorb it. Torsion had work right up to the day it stopped.
The collapses that matter are the ones you see coming
Weekly analysis on contractor risk, payment reform and the money moving through construction.
Join 3000+ ReadersThe law is changing, just not in time
What the Commercial Payments Bill does and does not fix
The Commercial Payments Bill went to Parliament in May 2026, following the government’s response to its late payment consultation on 24 March. Four measures matter here: a 60-day maximum payment term with strictly limited exemptions, mandatory interest at 8% above the Bank of England base rate, a right to a fixed sum where a purchaser raises a dispute late or without proper information, and a ban on deducting and withholding retentions under construction contracts.
The retention ban is what the supply chain has pushed for since 2019. Retention held by a contractor that goes under becomes unsecured debt, and unsecured creditors sit at the back of the queue. Government will consult further on implementation, and has confirmed a lead-in period and transition before the powers bite. The measures are not retrospective. For the subcontractors owed money by Torsion this week, none of it helps.
Early warning signals, ranked by notice
A quick reference for anyone carrying counterparty exposure
The signals arrive in a fairly predictable order, and the ones buying you the most time are the ones fewest firms are set up to catch.
| Signal | What it looks like | Where you find it | Notice it buys |
|---|---|---|---|
| Credit cover withdrawn | Insurer reduces or pulls cover on a named contractor | Your broker or trade credit insurer | Months |
| Winding-up petition | A creditor escalates unpaid debt to court | The Gazette, Companies House | Weeks to months |
| Payment behavior shifts | Longer terms requested, valuations disputed late | Your own sales ledger | Weeks |
| Senior finance turnover | FD or CFO leaves with no named successor | Companies House filings | Variable |
| Notice of intention filed | Directors seek breathing space from creditors | Companies House | Days |
What to do with this if you are still trading
Different reads for contractors, subcontractors and ConTech
If you run a main contractor, the question is which number you manage to. Margin tells you whether a job was worth doing. Cash tells you whether you will be around to find out. Anything that changes when money reaches you, direct payment included, deserves a working capital model before it gets a signature.
If you are a subcontractor, counterparty risk is the exposure that will hurt you most and the one most firms watch least. A credit check at onboarding and nothing after is how firms end up holding retention they never see. If you build software for this industry, Torsion is a clean case study in what the market needs and struggles to buy: cash forecasting that treats payment timing as the live variable, counterparty monitoring that surfaces a petition the week it lands, and payment rails that reach the people who did the work without routing through a balance sheet that may not survive the quarter.
Profit and cash are separate things. Torsion reported £1.1m of operating profit on £165.4m of turnover for the year to 30 June 2025, a margin of roughly 0.7%. At that level, one badly performing contract can wipe out a full year of profit, and rapid revenue growth demands more working capital rather than less. Interpath pointed to liquidity pressures driven by delayed capital events, contract margin pressure and rising input costs. The company had work. It ran out of the cash needed to keep delivering it. (Source)
Direct payment means the client or funder pays subcontractors straight rather than routing money through the main contractor. It protects the supply chain and keeps jobs moving when a contractor looks shaky. The trade-off is that the main contractor loses the cash flowing through its accounts, which many firms rely on to fund overheads and other sites. Torsion Group said the arrangements protected clients and safeguarded supply chain payments, while significantly reducing the working capital available to the construction business. (Source)
Unpaid invoices and retention held by an insolvent main contractor generally rank as unsecured debt, placing those creditors near the back of the queue behind secured lenders and preferential claims. Recoveries in that position are usually a fraction of the sum owed, if anything arrives at all. Torsion had been working to secure direct payments to subcontractors ahead of the administration to limit the hit, and the administrators are working with funders to complete some of the twelve live sites. Anyone owed money should register their claim with Interpath and take their own advice. (Source)
No. The administration relates only to Torsion Construction Limited. Torsion Group has said its other businesses, including Torsion Care, Torsion Projects, Torsion Homes and Torsion Developments, continue to operate as normal. The group had already been shifting towards construction management and development management work, a lower-risk and more capital-efficient model that avoids carrying delivery risk on the balance sheet. (Source)
There were 3,805 construction insolvencies in England and Wales in the twelve months to June 2026, accounting for 17% of all cases where an industry was recorded. That keeps construction top of the sector table, a position it has held for several years running, though the twelve-month figure has been easing rather than rising. Specialist subcontractors make up the largest share of monthly totals. (Source)
It should reduce the exposure sitting with subcontractors, but it does not solve the underlying working capital problem for main contractors. The bill imposes a 60-day maximum payment term with limited exemptions, mandatory interest at 8% above the Bank of England base rate, a right to a fixed sum for late or poorly evidenced disputes, and a ban on deducting and withholding retentions in construction contracts. Government has confirmed a lead-in time and transition period, and the measures will not apply retrospectively. (Source)
Start with the public record. Winding-up petitions are published in the Gazette, and notices of intention to appoint administrators appear at Companies House alongside filed accounts and director changes. Torsion faced a petition from J H Shouksmith & Sons in February 2026, five months before it filed its notice of intention. Beyond filings, ask your broker whether trade credit insurers have reduced cover on the contractor, watch for payment behavior slipping against terms that used to be honored, and treat requests to extend terms as a signal rather than an administrative detail. (Source)
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4,000 Firms Gone in a Year – What the UK Construction Insolvency Crisis Actually Means
Construction’s Cash Flow Crisis – Are 24 Hour Payment Terms Truly Achievable?
Construction Enquirer – Torsion Construction goes into administration
Construction News – Torsion Construction enters administration
Yorkshire Post – Administrators appointed to Torsion Construction
GOV.UK – Commercial Payments Bill overview
Insolvency Service – Company insolvency statistics, June 2026
S&P Global – UK Construction PMI
