Administrators winding up Aberdeen housebuilder Stewart Milne Group Limited and its subsidiaries have charged more than £6 million in just six months.
Teneo Financial Advisory was appointed as administrators for Stewart Milne Group (SMG) and five subsidiaries in January.
A report coving the first six months of the administration shows Teneo has charged for thousands of hours of work at an average rate of more than £900 an hour.
The total bill of £6,173,209 means administrators have been charging more than £1m a month. So far, Teneo has not taken any payments.
With the administration expected to continue for several years, this sum will only increase.
Meanwhile unsecured creditors have been told not to expect any dividend.
Stewart Milne administrator’s charges
The hourly rate Teneo charges for its staff ranges from £440 to £1,375 an hour. It bills for time in six-minute increments.
The hourly rate for a director is between £1,270 and £1,375. Assistant directors charge £1,040 an hour, managers are £945 an hour, consultants £755 an hour and £440 for an associate consultant.
Handling the SMG administration alone has so far involved 4,219 hours of work costing more than £4m.
The administration of the subsidiaries adds another 2,270 hours of work at £2.15m.
There are substantial debts within the businesses. Bank of Scotland, a preferential creditor, is owed £107.9m while HMRC, a secondary creditor, is due around £1.7m.
There is not expected to be any money left for hundreds of ordinary creditors owed more than £33m.
The Teneo report adds: “No fees have been drawn to date as we have not yet received approval from relevant creditors.
“We do not expect to recover our time costs in full. Any unpaid balance will be written off as irrecoverable.”
Teneo said it is due more than £200,000 of costs for work with the companies prior to the administrations.
The financial advisory business declined to comment on the amount of fees it is charging.
What work has Teneo done?
The work of administrators is wide-ranging. Their main purpose is to liquidate assets, establish the debts, make payments to creditors and wind up the business.
In its progress report Teneo said it has provided support for employees making claims for unpaid amounts via the Redundancy Payment Service.
It also contacted customers who had reserved homes to detail steps to submit claims or obtain refunds.
It liaised with HMRC and studied digital and physical records held by the company.
Teneo has worked to establish the number of creditors.
It also launched a sales process for eight partially completed sites. In the first six months of the administrations, it sold five sites which raised £15.7m.
Teneo expects to extend the period of each administration for at least 12 months to enable the sale of unrealised assets.
The amount of fees charged typically reduces the longer an administration goes on, as there are fewer assets to sell.
Reporting on time incurred is a statutory requirement of administrations. Any fee request needs the approval of creditors in line with insolvency legislation.
The collapse of Stewart Milne Group in January led to hundreds of jobs losses. Read all of the Press and Journal coverage here.
Conversation