Bank of Scotland bears brunt of collapsed building group's £14m debt

BUILDING group Robison & Davidson, one of Scotland's largest construction busi- nesses, left behind debts of at least £14 million when it collapsed earlier this year with Bank of Scotland alone expected to be the biggest loser.

Dozens of creditors - many small sub-contractors across the company's heartland in Dumfries and Galloway - have been left out of pocket by the collapse of the company, which also traded as R&D Construction group, with little prospect of a return.

More than 200 jobs were lost when tough trading conditions in the housing market were blamed for the administrators being called in at the Dumfries-based group in April.

Work to realise assets and assess the total amount owed is continuing but in an update filed at Companies House, administrator Ernst & Young said it believes there will be a shortfall to the secured creditor, Bank of Scotland, which called in administrators in April after the company defaulted on its banking agreements covering some 14m of loans. The estimated deficiency currently stands at 7.2m.

It is also thought unlikely that unsecured creditors, who are expected to be owed around 8m in total, will see any return on the money they are owed.

In the report on the failure of the group, the administrator said that cashflow difficulties arose early in 2011 because of wider problems in the housing market.

A rescue of the company as a going concern had not been a viable option given the level of debts and the nature of the construction business where contracts are effectively terminated as soon as administrators are appointed.

The business had traditionally focused on the construction of private houses but amid difficulties in the market in recent years shifted its focus towards the affordable housing sector.

The company's sole customer at the time of its collapse was Dumfries and Galloway Housing Partnership, which had contracted R&D Construction to build 312 houses for new-build social housing and 200 to be sold on behalf of the housing association. The three-year contract, which began in May 2009, was due to finish in summer 2012, with the contract for the houses for sale extending to 2015.

The group has some 16 completed houses which remain to be sold along with six landbank sites across south west Scotland.

The demise of R&D had been the latest in a series of high-profile collapses in the Scottish construction sector.

Newbridge-based ERDC Group, which operated civil engineering and building divisions and also had a sports surfacing unit, went into administration in November with the loss of 73 jobs.

That came just weeks after hundreds of Scottish construction jobs were axed by administrators handling collapsed builder Rok.

At the time the collapse was described by Dumfries Labour MP Russell Brown as an "absolute tragedy" for the workforce and for Dumfries and Galloway.It also cast doubt on the future of Lockerbie Data Centres, an ambitious plan for a huge data centre and business park.