Stewart Milne creditors owed £33.4m 'unlikely to get any money'

Hundreds of unsecured creditors – including employees and businesses – owed money by the Stewart Milne Group are to receive nothing after the firm collapsed earlier this year.

Founded by the former Aberdeen FC Chairman in 1975, the housebuilder went into administration in January, with 217 jobs lost and a number of existing projects scrapped.

Hundreds of subcontracts, customers and staff are now facing a £33.4m black hole in retrieving money owed, with 196 claims received from former employees since the collapse.

Teneo, appointed as administrators, said Bank of Scotland, which was due £107.9m, and HM Revenue and Customs due £1.7m in taxes are expected to be the only creditors to receive payment.

Stewart Milne: Founder of the house building business said he was 'devastated' at administration news. — Stewart Milne: Founder of the house building business said he was ‘devastated’ at administration news. SNS Group

A report dated August 14 read: “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.”

It added: “It is unlikely that a dividend via the Prescribed Part will be available to unsecured creditors in any of the administrations.”

Teneo also expects to extend the period of administration by 12 months to “enable sale of the unrealised assets and the conclusion of employment tribunal claims”.

Staff told STV News they felt “disgusted” about the treatment they received since the administration notice and said there was uncertainty about redundancy packages and pay.

Ten housing projects run by the firm have been left unfinished including Dunnottar Park in Stonehaven, with home owners expressing their anxiety about the future of their houses.

Five sites have been sold since in places such as Arbroath, Hamilton, Bishopton, Haddington and Danderhall.

One customer told STV News earlier this year they lost at least £4,000 on their new home and received a generic email that instructed house buyers to make “alternative plans”.

The group had its headquarters in Aberdeen with offices in, Edinburgh, Glasgow and other UK bases and had been in significant debt for more than a decade.

A sales process was run by the firm from May last year but directors made the decision to put each of the group’s companies that operate active development sites in Scotland into administration.

The Group had faced “significant challenges” in recent years, with financial uncertainty related to rising interest rates, cost increases and a reduction in consumer confidence

Lloyds Banking Group said the collapse followed several years of special agreements, including multiple extensions on its debts.

A spokesperson for Lloyds Banking Group said in January: “When a company experiences financial difficulties, we will always try to find a solution that places the business onto a sounder financial footing without the need for any insolvency process.

“Unfortunately, despite several years of support and forbearance, including multiple maturity extensions to the borrowing, this has not been possible in this instance.

“We will now work with the administrators, as they consider the best options for the business.”

In a statement earlier this year, Milne said: “I am devastated by this totally unexpected outcome of the sale process and struggling to accept it, given the profound impact it will have on employees, sub-contractors, suppliers and customers.

“Stewart Milne Group was up for sale and, following significant interest, two bids were submitted. The bank has not accepted either bid and withdrawn its funding which left the directors with no option but to appoint administrators.

“I tried everything I could to find a way to achieve a better outcome for the business and the people who depend on it. I believe one of the bids could have delivered a comparable, financial return to administration and, crucially, allowed the business to continue to operate, safe-guarding hundreds of jobs and protecting livelihoods.”