Creditors to collapsed Dundee building firm WH Brown can expect to wait weeks before they discover how much they will be paid.
Receivers at Brown’s former West Pitkerro base say it is very early days for their investigation into the finances of the failed construction company, and that they are still in the throes of calculating its debts.
Derek Hyslop and Colin Dempster, of Ernst and Young, say they don’t want to speculate on how long that could take but added that secured and preferential creditors, like banks, would be paid off first.
Only then would others, including suppliers and other associated firms, stand to receive pence-in-the-pound payments.
Brown called in the receivers on Monday after market conditions deteriorated to the extent that the receivers said an immediate cessation of trading was necessary.
And as The Courier revealed, the company has an outstanding charge on its premises in favour of the Lloyds-owned Bank of Scotland. Most recent accounts show the firm had total debts of £6.8m in the year to November 2010, while bank debt totalled £2.7m.
”The joint receivers are focused on establishing the extent of the parent company’s debts,” a spokesman for Ernst and Young said. ”Following that, it is their aim to recover and realise the value of the companies’ assets.
”This will be used to pay off debts to secured and preferential creditors, with remaining monies being divided among other classes of creditor. It is too early to comment on the identity of the creditors, sums owed and the duration of the process.”
But he stressed that the receivers would give every assistance to employees making claims to the UK Government-backed redundancy payment scheme, which ensures that workers receive the statutory pay they are entitled to.147 redundanciesThe receivers also confirmed that a total of 147 redundancies were made on Monday, nine from Brown subsidiary Bronco Timber Products. The figure is significantly higher than the 130 roles originally estimated on Monday.
A further 15 staff have remained at the firm to assist Mr Hyslop and Mr Dempster with their investigations, while the PACE employability skills team are also on site.
Dundee East MP Stewart Hosie and Dundee City East MSP Shona Robison said they would meet the receivers today.
”We are reassured that the PACE team are already involved and standing ready to take immediate action to find alternative employment for these highly-skilled tradesmen,” Ms Robison said.
”We need to ensure they are given all the advice, help and support they need to find new jobs or retraining if that is appropriate.”
Chief executive of Dundee and Angus Chamber of Commerce Alan Mitchell said the knock-on effects of the receivership could have ”a dramatic effect” on suppliers and subcontractors, as well as the wider economy in Dundee.
”There will be subcontractors and suppliers across a range of business services who will lose income as a result of this company calling in the receivers,” he said.
”In these times, even a small drop in business can have a large effect on a small business.”
And he repeated a call for public authorities to direct whatever capital funding they have available to infrastructure projects like the ”large, important developments” already under way at Dundee’s Waterfront.
”This strengthens the case for public sector funding to be directed towards infrastructure investments, which can disproportionately benefit construction in the short term as well as create long term benefits for the economy,” Mr Mitchell said.