Subcontractors and businesses owed millions from the collapse of Perthshire housebuilder Hadden Construction are “highly unlikely” to see a penny.
Aberuthven-based Hadden, which had a workforce of 67 staff, went into administration in September.
Administrators Alvarez & Marsal were appointed after weeks of speculation about the financial health of the business.
Now the administrators have detailed the level of debts in the business in a report to creditors.
Hadden Construction debts of £10 million
The report shows that Hadden’s debts totalled more than £10 million when it went into administration.
Preferential creditor Bank of Scotland, which held security over several assets, was owed around £541,000.
HMRC is owed more than £2.4m, while preferential employee claims are estimated at £150,000.
Claims from unsecured creditors are estimated at £6.7m while further employee claims are £845,000.
The firm had a balance of £620,000 credit in its Bank of Scotland account when it went into administration, meaning the bank will be repaid in full.
Preferential creditors – which include the smaller employee claim and HMRC – are expected to receive a dividend once company assets have been realised.
Unsecured creditors, which include around £2m in claims from subcontractors – are not expected to receive a dividend at all.
What led to the demise of Hadden?
Alvarez & Marsal (A&M) has detailed their involvement with Hadden, which started in February, seven months before the administration.
At that point the role was to “undertake a review of the financial position and options for the group”.
The report states: “The review highlighted significant deficiencies in the company’s finance function.
“A&M recommended the engagement of an interim consultant to address these deficiencies.
“Following this report, dated May 1, an interim adviser was brought into the business.
“In August 2024, Hadden’s deteriorating liquidity position was continuing to restrict the ability to meet ongoing liabilities.
“Arrears of subcontractors’ costs totalled more than £2m and many had withdrawn their services pending the payment of outstanding amounts.
“The company received two demands for payment from sheriff officers and debt collectors and two directors resigned, citing the financial position of the company.
“As a result, A&M was engaged to provide accelerated contingency planning for the company to prepare for an imminent insolvency appointment.”
What are the company’s assets?
Upon the appointment of administrators, 62 of the company’s 67-strong workforce were made redundant. Retained employees have subsequently left the business.
The demise followed attempts by the directors to handle the HMRC bill.
The report notes: “The company had agreed a time to pay arrangement with HMRC which helped to alleviate liquidity issues in the short term.
“However, the company was unable to continue meeting these obligations, ultimately incurring a total VAT liability of approximately £2m, excluding penalties and interest.”
DM Hall has been instructed to sell the company’s head office and land it owns in Croy, North Lanarkshire, which was intended for housing.
The seven company vehicles which were not leased have been sold by administrators, raising £49,300.
According to the company’s books, the value of work in progress was listed at £3.7m. However, projects Hadden was engaged in were all stopped.
Trade debtors was listed at a further £3m. An external firm has been appointed to realise any value, and the expected sum from this is unknown.
The report adds: “Based on current estimates, we do not anticipate there will be a dividend to unsecured creditors.”
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