Bruce Cartwright and Graham Frost of PricewaterhouseCoopers were appointed as joint receivers or administrators to Kilmartin Holdings, Kilmartin Property Group, and Annfield Estates, the private vehicle of founder Iain Wotherspoon, who sold the 50% stake to the bank in June 2007.

The bank is thought to be owed at least £250m, and the value of the group’s development projects was yesterday put at £300m – compared with the “£1bn-plus” being quoted two years ago.

Two months ago Lloyds sent administrators into 22 companies at John Kennedy’s Kenmore group, founded 10 years earlier than Kilmartin, which had investments and developments said to be worth £3.3bn, and assets of just £20m.

Frost said: “Following the well-documented slowdown in the property market, the directors have re-evaluated their longer-term strategy, including a potential refinancing of the group. After discussions with the existing lenders, the decision has been taken to place these holding companies into receivership or administration.”

HBOS installed two of its own executives on the Kilmartin board in 2007, but bank sources were suggesting yesterday that the relationship had for some time been purely a lending one, with “no equity” now involved. It was noted that whatever the debt, it had already been included in HBOS writedowns.

Wotherspoon told the Herald in November: “We have been working constantly with the bank for the last year, reducing overheads, maximising returns, generating income, maximising voids, all the usual stuff...There are always a lot of options open to the bank, they are looking to reduce their losses as best they can.”

He went on: “I can’t see what benefit a fire sale would have to the customer or to the bank in this market...I would be surprised if a bank wanted a distress sale.”

Frost said yesterday: “Our immediate priority will be to review the existing position, explore options and to develop an effective strategy for the businesses. During this process, we will work with all stakeholders and employees and would also like to reassure the existing tenants of the properties that this process will have minimal impact on them.”

Kilmartin, founded in 1996, had reported a 20% rise in pre-tax profits to £9m in 2007 when HBOS took its 50% stake. It employed 50 staff and planned to more than double its UK offices to five.

Three months later it bought the Amerdale investment group in a £4m deal intended to trigger a £100m expansion into Europe – scene of Kenmore’s major expansion during the previous few years. Kilmartin also paid £2.5m to buy Kilbride, a company set up by Wotherspoon to invest in railway land assets – which made a £1.9m loss in 2008.

In June last year Kilmartin reported a pre-tax loss of £46.7m and a balance sheet deficit of £16.4m. Annfield Assets reported a £10.3m pre-tax loss and a deficit of £13.9m. Wotherspoon was said to have been working since last June on a possible management buy-out, but as in the case of Kenmore it could not be financed.

Cartwright at PwC commented that with property valuations still only at half peak levels, it was a case of deciding in the short-term whether to “hold, sell or test the market” and develop a longer-term strategy. “For existing tenants of properties it is business as usual.”

The Kilmartin group has a UK portfolio of industrial, office and retail properties, development sites, and interests in joint ventures. Its subsidiary companies and ventures are not affected.

The company was one of Scotland’s bigger developers, working on schemes across the UK including a business park in Teesside and a major waterfront regeneration scheme in Southampton.

In Edinburgh it has just completed the Cube offices on Leith Walk and the redevelopment of the former Lothian Council building on George IV Bridge.