THE owner of failed Fife interior fit-out specialist Havelock International had not yet paid hundreds of thousands of pounds to purchase the head office it agreed to buy when it rescued the business from administration last year.

Nearly 250 staff, amounting to the vast majority of the workforce, were made redundant at the company this week after administrators at PricewaterhouseCoopers (PwC) concluded it was not possible to continue trading the business while a new buyer was sought.

The failure, attributed to challenging trading conditions, came just a year after private equity turnaround specialist Rcapital acquired the business following the collapse of its previous owner, Havelock Europa.

More than 300 jobs were saved when Rcapital relaunched the business as Havelock International last July.

READ MORE: 247 jobs lost as Havelock International falls into administration

GMB Scotland yesterday hit out at the firm for failing to engage the workforce prior to this week’s redundancy announcement. It contrasted this with the approach taken last time when it said the union had worked with the Scottish Government and its agencies to ensure the factory remained open while the business transferred from Havelock Europa to Havelock International.

GMB Scotland organiser Allison Cairns said: “This week, owners and management favoured secrecy allowing cash-flow problems to escalate to the point that they could no longer pay wages, for work already done.”

Ms Cairns added: “The result for some of our members could be personally catastrophic, with families with more than one member both employed at Havelock. GMB Scotland will do everything in our power to secure financial compensation, including for the lack of notice and consultation, but it is still quite possible that workers could lose their homes as well as their livelihoods.”

READ MORE: Over 300 jobs saved as Havelock Europa secures rescue deal

Rcapital agreed to buy the Havelock Europa business and the majority of its assets from administrators PwC on July 3 last year. However it emerged yesterday that it had still to reach agreement on the purchase of the company’s head office at Mitchelston Drive in Kirkcaldy – part of the original sale and purchase agreement.

Rcapital had initially agreed to acquire the freehold of the property for £800,000. But according to the latest administrators’ report for Havelock Europa, which became available at Companies House yesterday, the sale deal had not been completed by the time the update for the six months to July 2 was filed. That was despite a reduced price being agreed between the two parties.

PwC confirmed yesterday that Havelock International had not completed the purchase of the property by the time it entered administration, and had been occupying the building under licence.

READ MORE: Havelock creditors to lose out on close to £30m

The latest administrators’ report on Havelock Europa, prepared by Graham Frost and Toby Scott of PwC, states: “The purchase of the freehold to HIL is yet to complete. As a result of surveys which highlighted issues with the property roof the Purchaser was unwilling to complete the property transaction at the agreed price of £800k.

“A purchase price of £550k has been renegotiated, rising incrementally to £730k if the sale completes on the backstop of June 30, 2020.”

Under the original deal to buy Havelock Europa, Rcapital agreed to pay £1.15m plus 25% of the amounts collected from the debtor book it took on to acquire the business and the majority of assets in July last year. Some £350,000 was paid on the date of the sale relating plant, machinery and stock, with £800,000 relating to the Mitchelston Drive property.

PwC said Havelock International had paid the administrator the full amount owed - around £1m - relating to the debtor book.

The latest report for Havelock Europa, which had been one of Scotland’s longest-running listed businesses and had struggled after the loss of a contract with a major retail bank, revealed an increasing in fees charged by the administrators.

The administrators’ fee estimate had increased to £497,587.10 by July 30, exceeding the initial estimate of £375,000, which the administrators said was partly due to the ongoing renegotiations over the property deal.

According to the administrator, the over-run also reflected work involved in reaching agreement on a final position with regard to the deferred consideration.

The report details amounts owed to secured and unsecured creditors as a result of the failure of Havelock Europa.

On secured creditors, Bank of Scotland is owed £5.1m, of which it is estimated to receive between 25% and 35%. Scottish Enterprise, which gave the company an emergency loan of £3m early last year, is not expected to receive any of the £2.8m it is owed.

Unsecured creditors are not expected to receive any of the £20.2m they are owed.