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Liquidators reveal key reasons why Elgin housebuilder Morlich Homes failed

All employees were dismissed with effect taking place on September 23.

Morlich Homes HQ in Elgin. Image: Jason Hedges/DC Thomson
Morlich Homes HQ in Elgin. Image: Jason Hedges/DC Thomson

Increased construction costs and “worsening” market conditions have been blamed for the collapse of an Elgin housebuilder.

Morlich Homes ceased trading yesterday after the board came to the decision in a meeting earlier this month.

Its five staff received a letter yesterday to let them know they would be dismissed with immediate effect.

Mha partner Michael Reid has been appointed to handle the winding up of the housebuilder.

Mr Reid is a licensed insolvency practitioner and partner at MHA, based in the Aberdeen office on at Carden Place.

Morlich Homes constructed its first house in December 2010. It prided itself on a reputation for creating “high-quality, distinctive homes” along the Moray coast.

Sales slowed down ‘considerably’

Mr Reid confirmed there were a number of reasons behind the decision to liquidate Morlich Homes.

He said: “Due to the increased costs of construction and worsening market conditions, plot sales slowed down considerably.

“Construction costs of the factory that Morlich Homes built in Elgin were in excess of the projected sum, causing cash flow problems.

Morlich Homes director John Main pictured at one of the Morlich Homes sites in 2021. Image: HIE

“After a full review of the options, Morlich Homes ceased trading activities permanently shortly prior to liquidation in order to protect all stakeholder groups.”

After being appointed yesterday, Mr Reid also confirmed creditors would be sent a report on September 24, which will be posted on the creditor portal.

The liquidator is currently reviewing what next steps are possible for customers who have already put down deposits or paid any amount towards an unfinished home.

What liquidation means for Morlich Homes assets

Mha said Morlich Homes assets will now be valued before being sold to settle creditors in full.

These include its Elgin factory, which cost the firm £1.1 million to build three years ago.

It was expected to create 14 jobs, adding to the 15 Morlich Homes employed at that time.

It also has nine serviced plots with planning permission in Elgin as well as a former show house in Buckie.

Mha said: “Current indications suggest that asset realisations should be sufficient to settle the secured creditor in full, leaving a residual balance for preferred and unsecured creditors.”

John Main, managing director of Morlich Homes.

These assets are being subject to an independent valuation.

Meanwhile, Morlich Homes’ other assets include plant, machinery and vehicles subject to hire purchase and sundry debtors.

These are also being valued, by Thainstone Specialist Auctions in Inverurie, and will be sold as soon as possible.

Morlich Homes’ former managing director, John Main, has been contacted for comment.

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