Creditors of a firm which was awarded a major contract by ScotRail last February but went into administration a fortnight ago are questioning how it collapsed so quickly.
Northsouth Communication, formed in 2010 by directors George Smith and managing director George Innes Smith, announced a year ago that it expected to double turnover to £7m, hire 25 new staff, and move to larger premises.
That followed its selection by ScotRail to provide electrical and maintenance services at stations and train depots across Scotland.
The expansion was said to have been backed by a six-figure asset lending facility from Lloyds Banking Group.
Northsouth's contracts included the maintenance of closed-circuit television at 130 stations, customer information screens at 349 stations and ticket-vending machines on 101 platforms.
The company said at the time that the bank's support had given it "the freedom to take on new staff and projects, without affecting the company's cash flow". It created "room to manoeuvre when gaining new contracts or waiting for old projects to be paid".
Trading ceased at Northsouth on January 23, three days after administrators Keith Anderson and Adrian Allen from Baker Tilly had been called in with a view to keeping the business trading.
Baker Tilly said: "This proved impossible... regrettably, the administrators had no choice but to make the 126 employees redundant."
One subcontractor and creditor who contacted The Herald said he could not understand how such a prestigious contract could be followed so quickly by disaster.
A year ago Paul Dinnell, client manager at Lloyds Bank Commercial Finance, said: "An asset-based lending facility is often used to improve a company's working capital and cash flow. In this case, it is helping to support the growth ambitions and projects of Northsouth Communication as well as an increase in staff numbers needed to deliver new contracts."
Lloyds Banking Group commented this week: "North South Communication has been a client of Lloyds Bank since 2012. Over the last few months we have sought to resolve the challenges facing the business and place it onto a stronger financial footing. Unfortunately it has not been possible to safeguard the business without the need for administration."
ScotRail said each of the contracts awarded to Northsouth had been out to tender. A spokesperson added: "This included pre-qualification questionnaires, reviews of financial statements and presentations by the company's senior
management team." Scotrail could not comment further.
George Innes Smith, who could not be contacted at the firm yesterday, has no other directorships listed at Companies House apart from Northsouth Structural services, a dormant company. Northsouth Communication is shown as having net assets of £1.5m, and shareholder funds of £263,000 as at March 31 2013.
Local MP Gordon Brown last week offered his help, noting that most of the 126 jobs had been outwith Fife, but lamenting that the ambitious firm had "failed to meet its targets".
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