More than 20 parties had been in contact with Sto Ltd about helping foot bill for repairs

Administrators for an external wall insulation specialist which collapsed in January have said the expected 拢50m cost of cladding claims it was facing helped send it under.

Sto Ltd, which was based at King鈥檚 Norton near Birmingham, called in Grant Thornton in the middle of January.

The firm was a subsidiary of German parent Sto SE & Co. KGa, set up in 1954, and which had a turnover of 拢1.5bn in 2023. It employs more than 5,700 people across nearly 40 countries.

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Sto Ltd went into administration in January

In an update filed at Companies House this week, Grant Thornton said: 鈥淔ollowing the introduction of the 精东影视 Safety Act 2022, building owners are required to remediate defective or non-compliant cladding. This has resulted in claims by building owners against the original building contractors and suppliers of cladding, seeking contributions towards the cost of remediation.

鈥淸Sto Ltd] has been approached by more than 20 parties representing, either claims, pre-action protocol letters or notification of potential claims in respect of building projects undertaken for the period 1997 to 2015.鈥�

It said the potential cost of the claims was around 拢50m which, Grant Thornton said, had been 鈥渂ased on the directors鈥� worst case scenario if the company is not successful in defending the claims鈥�.

It added: 鈥淭he UK directors formed the view that the company was unable to meet its financial obligations in defending these claims or covering any potential losses arising from any proceedings. They further concluded that the company was technically insolvent and should consider the process of administration. This view was shared with the company鈥檚 parent company Sto. Se.鈥�

Grant Thornton said the parent, having decided Sto Ltd was unable to pay its debts, lodged a petition to wind up the company in the middle of December last year. It said it was then agreed 鈥淸Sto Ltd鈥檚] directors would petition for the appointment of administrators鈥�.

In its last set of results, Sto Ltd posted an improved turnover of 拢15.8m in 2023 but pre-tax profit fell 12% to 拢672,000.

Income in 2024 was projected to be 拢16.7m with net profit of 拢468,000, down 5% on the previous year.

According to Grant Thornton鈥檚 report, 48 people were employed by the company with 36 losing their jobs in January while a further eight have been kept on to help with the administration.

Employees, who have been classed as preferential creditors, have been paid back more than 拢22,000 in outstanding holiday pay with a further 拢9,000 in pension payments also paid. Secondary preferential creditor, HMRC, due close to 拢392,000, has also been told to expect its money back.

Unsecured creditors are owed 拢54.7m with around 拢50m of this in contingent claims for cladding repairs.

Sto SE & Co. KGa has been contacted for comment.