There is a growing expectation that Harland and Wolff’s holding company will soon be placed into administration.
It will be the firm’s second insolvency in five years.
What has gone wrong?
Shipbuilding is a capital-intensive business which means you need to spend a lot of money before you can start to make money.
The major problem at this incarnation of Harland and Wolff is that it was never really financially strong enough to do that.
It ended up being dependent on a hard-nosed US lender while waiting for government support that never materialised.
All the while it was burning through cash as it tried to get its operations up to the size needed to tackle a major contract.
Harland and Wolff was bought out of administration in 2019.
Its previous Norwegian owners had withdrawn support and the business fell into insolvency, having not built a ship in a generation.
The new owner was not a recognised marine engineering company.
It was InfraStrata, a relatively small energy firm listed on London’s junior stock market whose major focus was developing a gas storage facility under Larne Lough.
It raised £6m from shareholders to help complete the deal and later tapped shareholders for more money but the sums raised were not equal to the firm’s ambition.
Central to that ambition was the Fleet Solid Support (FSS) project, a contract to build three support ships for the Royal Navy with a total value to Harland and Wolff of about £700m.
The shipyard’s role is subcontractor to the senior partner on the project, Navantia, Spain’s state-owned shipbuilder.
The award of that contract in 2022 was welcomed in Belfast as it heralded the return of shipbuilding to the city in what looked like a remarkable turnaround.
The then Northern Ireland Secretary, Chris Heaton-Harris, said it was a “fantastic testimony to Belfast’s shipbuilding heritage and reputation for innovation and expertise”.
Elsewhere there was scepticism about awarding such a large project of national importance to a company with so little recent experience in shipbuilding.
The then Labour MP Kevan Jones asked a series of parliamentary questions probing Harland and Wolff’s role.
Meanwhile the company’s financial losses were mounting.
The 2021 accounts, which covered a 17-month period, showed a loss of more than £25m.
The audited annual accounts for 2022 showed turnover of £28m and a loss of about £70m with the auditor’s opinion of “material uncertainty” about the firm’s ability to continue as a going concern without new contract wins and additional funding.
Unaudited accounts for 2023 saw a loss of £43m.
The company was increasingly reliant on high-interest borrowings from a specialist US lender, Riverstone, while telling shareholders that it was expecting to get a government guarantee that would allow refinancing with more conventional lenders.
As doubts grew about the guarantee and the company being unable to produce audited accounts, trading in its shares was suspended in July.
The new government confirmed there would be no support as there was “a very substantial risk that taxpayer money would be lost”.
Russell Downs, a restructuring expert, was parachuted in to act as executive chairman and began a strategic review of the business along with advisors from Rothschild bank.
By that stage it was clear that Harland and Wolff’s future would need a new owner with much deeper pockets than InfraStrata.
The question now is who that will be.