TWO Taunton building firms have collapsed owing millions amid claims that more companies could fold in a domino effect.

A&H Gadd and Ash Homes are in administration, but other companies in the Gadd Group, established 27 years ago in a former telephone exchange in Wiveliscombe, are continuing.

The boss said this week that current developments would be completed and anyone buying a home from the firms would not lose out.

The 57 staff heard on Tuesday they were being made redundant and administrators BDO were being called in.

Chairman Andrew Gadd said: “We ran out of cash after Barclays stopped funding us and had no option but to call in the administrators.

“The problem started when rumours were flying around about the company, some clients withheld payments and it spiralled out of control until the banks pulled the plug.” Mr Gadd said he was saddened by events and felt for those who had lost their jobs.

He said: “Gadd Homes and other companies are carrying on current developments – including Corporation Street in Taunton, Stogumber and other sites.

“Anyone who has agreed to buy or is buying a property from us should be OK.”

But its contract to build hundreds of new homes at Firepool Lock, as part of the Project Taunton regeneration scheme, will go to another developer.

The company, whose Cook Way offices were closed yesterday, reported improvements in September following recession-related difficulties.

But it made five redundancies and the remaining staff received “short-term pay cuts”. The boss of another Taunton firm, who asked not to be named, said: “We’re owed £50,000 – it’s a lot, but we’ll just about cope.

“A lot of other firms are likely to go under with lots of jobs lost.”