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Clugston’s 300-plus employees who lost their jobs when the company sank into administration late last year have been told they can expect to be paid all of their missing wages and holiday pay.

More than 250 of the firm’s 324 staff lost their jobs when the Lincolnshire contractor collapsed last December and were owed just under £494,000 in wages and holiday pay.

But in a progress report, administrators at KPMG said staff, listed as preferential creditors, can expect to be repaid in full – although it was unable to say by when.

Clugston, which was working on 21 schemes at the time of its collapse, sank owing more than £71m to trade contractors and other suppliers after running into problems on a series of energy-from-waste jobs.

Unsecured creditors, including subcontractors who were owed £11m, have been told they will get something back but KPMG said it was unable to say how much and by when.

Funds KPMG has raked in include £1.4m after it novated a contract to build an Asda store in Worksop, Nottinghamshire, to Hull contractor Ashcourt, selling IT equipment and furniture for a further £60,000 and recouping more than £800,000 from its construction and FM debtors.

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The report also reveals HCC International Insurance Company (HCCI) has made a £7m claim against Clugston.

KPMG said it had became aware that HCCI had provided a bond to Clugston, which was backed by an indemnity agreement with certain other companies in the group, that it had not previously seen.

The report said: "The indemnity agreement includes a clause to state that, no funds can be paid to related parties until HCCI has been fully repaid.

"We have sought advice from legal counsel with respect to HCCI’s claim and specifically, the enforceability of this clause. Counsel is of the opinion that the clause is enforceable and as a result, HCCI’s claim will rank ahead of all intercompany claims." HCCI is not expected to be fully repaid.

Based in Scunthorpe, Clugston was formed in 1937 and in its last set of accounts posted a £470,000 loss on turnover of £175m in 2018.