Hundreds of ordinary creditors owed more than £33 million from the collapse of housebuilder Stewart Milne will receive not a penny back from the ashes of the business.
The north-east group left a nine-figure debt mountain in its wake when it ceased trading in January.
Administrators winding up the firm have now confirmed they only expect to make payments to secured creditors – chief of which is Bank of Scotland which is owed more than £100m.
That leaves hundreds of contractors, suppliers, customers and staff facing the prospect of being left with nothing despite lodging claims worth more than £33.4m.
The Aberdeenshire housebuilding group, founded by Stewart Milne in 1975, collapsed in January this year.
Administrators at Teneo Financial Advisory have now given an update on work to establish the scale of the debts and liquidate assets from Stewart Milne Group (SMG) and five subsidiaries.
Stewart Milne Group debts
At the date of the administration, January 8 2024, Bank of Scotland, was due £107.9m.
The bank holds a first ranking standard security over the companies’ land and other assets – meaning it is first in the queue for any payouts.
The administrators noted that interest on the bank debt “continues to accrue”.
The Teneo report says it anticipates paying a dividend to the bank but did not know at this stage how much this would be.
It is estimated HMRC, a secondary creditor, is due around £1.7m.
Meanwhile, unsecured claims received to date total £33.4m.
The administrators note this figure is “significantly lower” than £153m forecast in the directors’ statement of affairs (SOA) in January.
The document explains this difference is mainly due to “intercompany creditor balances” between the Stewart Milne companies.
It said: “The variance between the value of unsecured creditors per the SOAs for each entity and the total of claims received is primarily driven by intercompany creditor balances for other entities that are in administration, where claims have not yet been submitted by the companies.”
Claims from employees still being received
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 confirms there’s now only one employee remaining within SMG.
To date administrators have received 196 claims from employees.
Workers 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.
The document states: “It is estimated that claims will total £258k… however, this has not yet been finalised as there are still active claims.”
Assessing the prospect for payments to unsecured creditors, Teneo said: “It is unlikely that a dividend via the prescribed part will be available to unsecured creditors in any of the administrations.”
Sales of some housing sites with talks continuing
The collapse of SMG and five of its subsidiaries left 10 projects unfinished.
These included Charleston in Cove, Aberdeen, Dunnottar Park in Stonehaven, Monarch’s Rise in Arbroath and Hunter’s Meadow in Auchterarder, Perthshire.
Teneo said a sales process was launched with 110 parties showing interest in sites.
This has resulted in five sites being sold – Monarch’s Rise in Arbroath and developments in Hamilton, Bishopton, Haddington and Danderhall.
The sales of the partly-finished sites has raised more than £15.7m in the six month period to July 7.
The document revealed one of the remaining sites is in the process of being sold.
It added: “Negotiations with prospective purchasers in respect of the remaining two sites are at an advanced stage, and the joint administrators expect to conclude missives in the near term.”
Teneo said it expects to extend the period of administration by 12 months to “enable sale of the unrealised assets and, in the case of SMG, the conclusion of employment tribunal claims”.
Read more: All our stories on the collapse of Stewart Milne Group
Conversation