From AI resources

MTD Walkers expanded aggressively into roads, piling, power, marine engineering, real estate, and infrastructure projects during a period when large government-funded construction contracts were flowing into the market.

By 2018–2019, the group had accumulated tens of billions of rupees in debt. Several reports alleged that some facilities from state banks were granted with inadequate security and that conflicts of interest existed because individuals connected to the company also held positions connected to state banking institutions.  

The Auditor General’s reports later noted that several loan facilities granted to MTD Walkers subsidiaries had become non-performing and that recoverability was doubtful because of weak security positions.  

Government Payment Delays

One of the explanations repeatedly given by the company and market analysts was that large sums were tied up as receivables from government projects. When political changes occurred and infrastructure spending slowed or projects were delayed, the company’s cash flow deteriorated rapidly.  

Construction companies typically depend on continuous progress payments. When those payments stop, bank loans that financed equipment, salaries, subcontractors, and working capital become difficult to service.

Banks Went to Court

As the financial situation worsened, multiple banks including state and private institutions sought court orders preventing transfers or sales of valuable subsidiary assets. Banks feared that if assets were moved out of the group, loan recovery would become impossible.  

Court actions were filed by:

• Bank of Ceylon
• People’s Bank
• Commercial Bank of Ceylon
• Other commercial lenders including NDB, DFCC, Sampath and Nations Trust.  

Walkers Colombo Shipyard

The shipyard at Mutwal was originally launched with considerable ambition and was intended to become a major marine engineering and ship repair facility.  

However, when the parent group entered severe financial distress, the shipyard also became entangled in banking disputes, mortgage issues, and loan defaults. Reports indicate that assets were eventually taken over by lenders after default on significant borrowings.  

 The closure of the shipyard represented more than a company failure. It meant the loss of skilled marine engineering jobs, repair capability, and foreign exchange earning potential.  

Ceylon Fishery Harbours Corporation Lease Dispute

There were also disputes involving the lease of the Modara/Mutwal fisheries harbour facilities. Reports stated that Ceylon Fishery Harbours Corporation claimed substantial unpaid lease rentals from Walkers Colombo Shipyard. The issue became politically controversial because questions were raised about whether the company was meeting its obligations while simultaneously obtaining large credit facilities from banks.  

Liquidation and Winding-Up

The situation eventually progressed beyond restructuring efforts. Subsidiaries such as Walkers Piling faced winding-up proceedings, and official banking and audit records now refer to MTD Walkers as being under liquidation or winding-up processes.  

Broader Lesson

The MTD Walkers collapse is often cited as one of Sri Lanka’s largest corporate failures. It exposed weaknesses in:

• State bank credit governance.
• Political dependence of large contractors.
• Overreliance on government infrastructure spending.
• Lending against future project cash flows rather than strong collateral.
• Delays in recognizing and resolving non-performing loans.  

The result was that contractors, banks, subcontractors, suppliers, debenture holders, and employees were all affected when the cash-flow chain broke down.  

The story of MTD Walkers is therefore not only about one company; it is also a case study of how politically linked infrastructure financing, weak credit controls, and abrupt changes in public investment can combine to create systemic financial stress.