The Titanic's construction firm declares financial insolvency
The money-losing UK shipbuilding company declared on Monday that it's probable they'll initiate insolvency proceedings shortly. Unlike liquidation, where a company is promptly dismantled, insolvency in the UK offers businesses a chance to restructure when they can't settle their debts.
In a communiqué, Harland & Wolff admitted that a £200 million ("facility" from UK Export Finance, a government department) request was denied, putting them in a tight financial predicament.
They've already advised their staff about job cuts in non-essential operations and the holding company. However, their major operations, like the Belfast shipyard that constructed the Titanic and is now contributing to the construction of three warships for the UK government, won't be affected. Instead, they'll carry on trading normally.
They're also exploring selling these operations while hunting for fresh financing.
Interim executive director Russell Downs acknowledged the company's predicament: "We're grappling with a very trying time, given the accumulation of substantial historical losses and our failure to secure long-term financing." Regrettably, he mentioned, "tough decisions had to be made to secure our four yards' future."
Harland & Wolff hasn't been a stranger to bankruptcy. In 2019, the British government appointed an administrator to oversee the company's recovery. But they received a reprieve when UK energy company InfraStrata purchased them.
Last year, Harland & Wolff, which finished the Titanic in 1912, launched its first completed vessel from its Belfast site in two decades.
They've primarily focused on repairing ships and transitioning to greener energy, including the Islandmagee Gas Storage Project in Northern Ireland, following their acquisition by InfraStrata.
Activities on the Islandmagee project will continue uninterrupted, according to Harland & Wolff.
In a statement, Matt Roberts, a UK labor union GMB's national officer, urged the UK government to "ensure no private company selects which of Harland & Wolff's yards or contracts to retain."
Leaving its yards and the UK government's warship contract, with its promise for UK shipbuilding, to the market's mercy isn't satisfactory, he said.
The UK government's spokesperson stressed the company's commitment that insolvency proceedings won't impact their shipyards, including fulfilling contracts for the UK's Ministry of Defence.
The spokesperson added that despite a review of the company's financial situation, it seemed that the market was the best place to handle these challenges, and providing the government with funding could potentially result in a substantial loss of taxpayer money. The government, they said, is working closely with all parties to find a solution for Harland & Wolff that preserves shipbuilding and manufacturing in Belfast, Scotland, and across the UK, while protecting jobs.
The company's financial predicament has led them to explore selling their major operations and seek fresh financing to avoid insolvency. Despite the potential insolvency proceedings, the UK government assures that it won't impact their shipyards and defense contracts.
