Merchant House Group (MHG), the financial services company connected to former Rangers chairman Craig Whyte, has entered administration.

Mr Whyte's vehicle Liberty Capital, registered in the British Virgin Islands, owned 10.8% of MHG which was listed on the Alternative Investment Market (AIM) until it was forced to exit last November.

Now MHG is in administration after being unable to pay the ongoing custody and administration costs of Merchant Capital, its structured product arm which itself went into administration in January.

Merchant Capital collapsed owing more than £1.5 million to creditors including £325,000 to HM Revenue & Customs.

Last May MHG's custodian, Pritchard Stockbrokers, where Mr Whyte had been company secretary, was wound up with a cash shortfall of £2.8m after being ordered by the Financial Services Authority to cease operations.

The regulator said the stockbroker had failed to protect client funds. Pritchard clients were covered by the Financial Services Compensation Scheme.