Stewart Milne Group (SMG) and subsidiaries which are also in administration collapsed owing hundreds of millions of pounds.
Ordinary, unsecured creditors including suppliers, customers and contractors were owed nearly £154m by the Aberdeenshire-based housebuilder.
And, as of the date of the administration, January 8 2024, Bank of Scotland was due £107.9m. Interest on the bank debt “continues to accrue”.
Banks are always preferential, secured creditors in administrations – meaning they are first in the queue for any payouts for whatever cash there is left.
Bank unlikely to recoup what it’s owed and there’s dire news for others left out of pocket by SMG’s collapse
In this case, administrators at Teneo Financial Advisory say there is unlikely to be enough money left – even after any asset sales – to repay the secured creditors, including the bank, in full.
This leaves 1,375 ordinary creditors and counting – more claims are expected to come in as the administration progresses – facing the likely prospect of getting back nothing at all.
The figures are revealed in a document lodged by Teneo at Companies House this week.
HM Revenue and Customs, as a “secondary preferential” creditor, is expected to make claims running into millions of pounds.
A separate document lodged at Companies House lists about 550 individual claims, totalling more than £8.2m, from trade creditors of Stewart Milne Group Limited.
At the lower end of the scale is a claim for just 4p from car retailer Arnold Clark., which submitted three other claims totalling about £8,900.
The biggest claim, as of earlier this month, was one for £538,452.97 from Aberdeenshire firm WM Donald.
Based in Netherley, near Stonehaven, civil engineering and construction contractor WM Donald submitted a separate claim for £214,012.70 – giving a total debt of £752,456.67.
The Press and Journal approached creditors including WM Donald and Aberdeenshire Council for comment but they did not respond.
At the time of its collapse, SMG Ltd had 329 employee creditors owed more than £9m.
They are classed as ordinary preferential creditors, puttting them lower down the pecking order from banks in any distribution of cash..
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They can claim for wage arrears, holiday pay and pension contributions through the administration process.
Any shortfalls can be claimed from the National Insurance Fund, which is also responsible for statutory redundancy payments.
Teneo”s notice of administrator’s proposals document was signed off on Wednesday.
It also reveals SMG’s founder and chairman, constuction entrepreneur and former Aberdeen Football Club chairman Stewart Milne, owned 77% of the business before transferring his shares to a Bank of Scotland subsidiary – HSDL Nominees – prior to Teneo’s appointment.
SMG, based in Westhill, near Aberdeen, had 329 employees at the time of its collapse.
A total of 217 workers were made redundant immediately, as the firm ceased trading, with 112 retained to help wind businesses down.
Teneo’s document shows there have been a further 31 redundancies since January 8.
10 Stewart Milne Group projects unfinished
Explaining SMG’s sudden demise, it says efforts to sell the housebuilder failed and continued construction was “not considered to be in the best interests of the company’s creditors”.
Completing work on unfinished housing projects was “not considered a practical possibility” due to limited funding and the joint administrators’ inability to provide warranties or “certainty of title” for new homes.
The collapse of SMG and four of its subsidiaries left 10 projects unfinished.
These include Chareleston in Cove, Aberdeen, Dunnotar Park in Stonehaven, Monarch’s Rise iu Arbroath and Hunter’s Meadow in Auchteradrder, Perthshire.
SMG owned 13 “non-operational land sites” and 42 contractual options to purchase land.
Draft accounts show the company made pre-tax losses of £23.3m during the 12 months to October 31 2023, compared with profits of £16.6m the year before.
And it turned over about £158m in the latest period, down from more than £183m previously.
Figures for 2021-22 were boosted by a £48.1m gain from the sale of a £100m turnover timber systems business in December 2021.
Rising costs, a challenging supply chain landscape and a notable decline in housebuyer demand meant difficult trading conditions throughout 2023.”
Teneo’s document says: “The group made an operating loss in the last two financial years, driven by weakened demand in the housing market compounded by increasing cost input pressure.
“Directors explored options to secure the future of the group and to restructure its debt.
“Rising costs, a challenging supply chain landscape and a notable decline in housebuyer demand meant difficult trading conditions throughout 2023.”
SMG was unable to meet its debt commitments and continue as a going concern after several failed attempts to sell the business, adds Teneo, whose time costs to date total more than £2.1m.
Read more: All our stories on the collapse of Stewart Milne Group
- The original version of this article reported a headline debt figure within the collapsed Stewart Milne Group of companies of circa £350m. We acknowledge this was incorrect and apologise for our error.
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