Liquidators have been appointed to a Scottish property company founded nearly three decades ago.
At its peak, the firm owned 30 properties in the north of Scotland, mostly rented by energy companies, and its documented closure points to dual issues in the rental market.
Binghill Estates Limited had a string of customers until a swing in the market led to its 2023 administration, as papers provide insight to the shift to “reduced demand for rental properties and downward pressure on monthly rental incomes”.
Administrators’ initial documents showed that, “historically, many of the residential properties had been rented to energy companies on long term leases, however, more recently the properties had been rented on Private Residential Tenancy leases which include statutory 28 days notice periods for the tenant which made cashflow unpredictable”.
The Aberdeen company also had an interest in a quarry in England and a property in Detroit in the US, the latter of which was later sold. It reduced its number of properties to six.
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The administrators stated: “In addition to the issues with PRT leases, there has been a reduced demand in Aberdeen for rental properties along with a downward pressure on monthly rental incomes.
“As such, the properties were producing insufficient revenue to cover the quarterly interest payments that had increased from 4% to 8% in line with base rate increases over recent years.”
The director had marketed for sale three of the residential properties and also a commercial property, however, “the supply in the property market has been higher than demand with the result that there has been limited interest”, the administrators said.
Its secured creditor bank has received payments totalling £1.8 million.
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Administrators said in their most recent report, from March this year, stated: “It is currently estimated that there will be insufficient funds available to pay a dividend to unsecured creditors other than from funds available under the prescribed part.”
The administrators said earlier: “The director, being unable to service the debts and progress the sale of the properties, contacted FRP to review the company’s position and discuss available options. The initial meeting with the director took place in May 2023. At this time there was interest in one of the residential properties which may have progressed to a sale prior to any insolvency and therefore, the position was closely monitored. Ultimately the sale did not conclude.”
After the appointment, the “duty of care is to all the company creditors as officers of the court and agents of the company, taking over from the board the responsibilities of managing the affairs, business and property of the company”.
The administrators said: “The bank had agreed to roll up the interest for the last three quarters, however, was unwilling to continue indefinitely. Accordingly, the director concluded that the company should be placed into administration.”
Now liquidators from FRP have been appointed.
The news comes after I earlier revealed that a Scottish housing development company fell into administration without completing any homes.
Edinburgh-based company Ailsa Homes purchased land in the Scottish capital and in East Lothian which has now been sold, administrators said.
The case follows a familiar pattern of small to medium-sized housebuilding companies in Scotland struggling to complete developments in recent years.
Ailsa Homes was placed into administration in September 2024 and is now to move into liquidation following the land sale and payment of debts.
