The collapse of Stewart Milne Group, even with the fast-mounting evidence that the surge in UK interest rates is taking its toll on the housebuilding sector, came as a bolt from the blue.

Stewart Milne, who founded the housebuilder nearly 50 years ago, is one of Scotland’s best-known business figures. And he is known to many more outside the traditional business world for his long-time chairmanship of Aberdeen Football Club, a role from which he stepped down in December 2019.

The fall of the housebuilder into administration has already resulted in more than 200 job losses among a workforce in excess of 300.

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What was particularly striking in this instance, aside from the grim and unexpected news itself, was the very public nature of the disagreement between Mr Milne and lender Lloyds Banking Group over whether the administration could have been avoided.

Often, such discord in the corporate world is kept behind closed doors or, at the very least, it emerges through quiet briefings as opposed to robust on-the-record comments directly from the parties at odds. Even when emotions are running high, such disagreements tend not to spill out immediately into the public domain.

Mr Milne, however, pulled no punches as he commented on the collapse of a business that he built up from scratch over decades and which is clearly very dear to him.

He focused on the bank’s decision to pull the plug and, crucially, the impact on those losing their jobs.

Mr Milne, who also highlighted the effect of the collapse on many others involved with the business, said: “I am devastated by this totally unexpected outcome of the sale process and struggling to accept it, given the profound impact it will have on employees, subcontractors, suppliers and customers.

“Stewart Milne Group was up for sale and, following significant interest, two bids were submitted. The bank has not accepted either bid and withdrawn its funding, which left the directors with no option but to appoint administrators.”

He added: “I tried everything I could to find a way to achieve a better outcome for the business and the people who depend on it. I believe one of the bids could have delivered a comparable financial return to administration and, crucially, allowed the business to continue to operate, safeguarding hundreds of jobs and protecting livelihoods.”

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One of the bids is believed to have come from Mr Milne himself.

Lloyds Banking Group was swift to respond with its side of the story.

Again, this seemed somewhat remarkable.

Often banks are reluctant to go on the record on the specific details of their lending relationships. However, Lloyds Banking Group chose to go into some detail as it defended its corner.

It declared: “When a company experiences financial difficulties, we will always try to find a solution that places the business onto a sounder financial footing without the need for any insolvency process. Unfortunately, despite several years of support and forbearance, including multiple maturity extensions to the borrowing, this has not been possible in this instance. We will now work with the administrators, as they consider the best options for the business."

The statement goes quickly from the generality of the bank’s philosophy to the specifics of its dealings with Stewart Milne Group.

The key point here, from Lloyds Banking Group’s perspective, seems to be that it believes it was patient: “several years of support and forbearance” and “multiple maturity extensions”.

Stewart Milne Group is a household name and a very long-established business, so news of its demise will understandably have surprised many people.

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Mr Milne’s own comments make it plain that the bank was calling the shots at the end, given the debt position.

Cash was raised in 2021 by Stewart Milne Group when it sold its timber frame systems business to Fife-based Donaldson Group.

The Aberdeen-based housebuilder was then put up for sale, with the latest attempt to secure a deal having begun in the spring of last year.

Sadly for everyone involved with the company, from employees and subcontractors to customers and suppliers and creditors, no transaction emerged which the bank was willing to accept and Stewart Milne Group collapsed into administration.

Insolvency practitioners from Teneo Financial Advisory were appointed as joint administrators of Stewart Milne Group Limited and six of its subsidiary entities on Monday.

The administrators flagged various pressures on Stewart Milne Group, including the surge in interest rates.

The Bank of England has hiked UK base rates from a record low of 0.1% in December 2021 to 5.25%.

Many other housebuilders have made plain the impact of this rising cost of borrowing on the market and on their businesses, with profits having tumbled at some big players and reservation rates down sharply.

It has clearly, in recent times, not been the easiest of environments.

And the economy in north-east Scotland, Stewart Milne Group’s home patch, has faced considerable challenges in recent years.

The housebuilder’s operations, of course, extended significantly beyond its home territory, with a raft of developments in central Scotland and north-west England.

Laying out the challenges which the housebuilder has faced, the administrators said on Monday: “Like many in the housebuilding sector, Stewart Milne has faced significant challenges over the last few years, with economic uncertainty due to rising interest rates, increasing cost pressure and an associated reduction in consumer confidence.”

They added: “The directors have explored multiple options to secure the future of the business, including running sale processes, most recently from May 2023. Unfortunately, this did not result in a transaction and other options to restructure the group were ultimately not viable. The directors therefore took the difficult decision to place certain group companies into administration, including each of the Stewart Milne companies that operate active development sites in Scotland.”

The administrators said they would “focus on realising the group’s assets and pursuing an orderly wind down of the business”, and added that, “regretfully”, 217 roles were made redundant shortly after their appointment.

Whether you take the side of Mr Milne or the bank, or neither, the sad reality of what has happened to the company remains the same.

It is a grim start to the year for everyone involved with Stewart Milne Group.