Glasgow property developer Barrie Clapham, who in 2006 sold a 44% stake in his Credential group to Bank of Scotland which injected £225m, has said the group is “a sound and solid company, supportive of its lenders”.

At a time when two of the bank’s biggest property co-venturers, Kenmore and Kilmartin, have gone under, Credential’s accounts just published show a £2.1m loss but a rise in asset value last year from £115m to £119m. They also record the resignation of auditors Ernst & Young, which according to another Companies House filing was due to a “divergence of views on the treatment of investment properties”.

Inquiries by The Herald also show that the group was involved in the liquidation last month of its former principal trading entity which had been sued for £100,000 by a supplier who had won an industry adjudication.

The liquidation of Stock 224 – in fact the renamed, former Credential Holdings – was advertised in The Herald by its directors, who include Clapham and Raymond Blin, the former PKF and Baker Tilly partner. In the same week a court action was due to be heard against Stock 224, which had been stripped of all assets last March in an exercise which shrunk its capital from £10 million to £2.75. The assets had been transferred to a new entity Squeeze Newco 3, which on the same day was renamed Credential Holdings.

Now Anne Buchanan, corporate recovery partner at PKF in Glasgow who has been appointed provisional liquidator of Stock 224, may readvertise the liquidation making clear that the entity is the original (not the new) Credential Holdings.

Clapham told The Herald that the upward transfer of assets and renaming was normal practice. She said: “It was part of a group reconstruction that has been under way for three years, that was the final step.”

Buchanan said: “In all instances the corporate shareholder Uberior Ventures (Bank of Scotland) was fully informed and was a party to each of the group reorganisation transactions, and all changes were carried out under the advice of PwC and DLA Piper.”

But less happy is supplier Maxx Underfloor Heating of Cumbernauld, which took Stock 224 (the former Credential) to the construction industry arbitration scheme over unpaid work and won an adjudication last May that the bigger group should hand over around £100,000.

Principal Neil McFarlane said he was asking the liquidator to investigate the impact of the group reconstruction exercise on the relative positions of Bank of Scotland and other creditors.

Credential’s position is that Stock 224 had launched a counter-suit against MMaxx which did not form part of the adjudication, and that normally it would fund any subsidiary to pursue such an action. On this occasion the liquidation has intervened.

Buchanan said she anticipated being appointed provisional liquidator of Stock 224 when she would “report to creditors on matters leading up to the winding-up of the company and what, if any, further investigations are required”.

Meanwhile last June, two months after the renaming exercise, Ernst & Young resigned as auditors to the 51 companies in the group, and were replaced by Baker Tilly. E&Y told Credential’s directors that there was a “divergence of views on the accounting treatment of investment properties”.

In the latest Credential accounts, the directors say the investment properties have been valued “on the basis that there is no open market upon which to base values ... the directors have therefore retained the valuations ... as at March 31, 2008, modified downwards where appropriate due only to reductions in rental income”.

The effect is to record a £4m rise in valuations to £119m.

The directors say they will “continue to maintain (our) long-term investment approach, thus not exposing the group to temporary variations in investment value”.

The accounts show that Credential has bank debt of £120m, and its shareholder funds are down by only £5m on the previous year to £47m.

Clapham said: “The current company has been in existence since 1982, we have a long-established relationship with Lloyds Banking Group, formerly HBOS, our rental income has increased, and we have no development portfolio to speak of.”

Bank of Scotland injected £225m into the group in 2006 when it took its 44% stake leaving Clapham with 52%.

Credential’s Glasgow landmarks include Skypark and Tay House.