by DOUG COLLIE
A development company set up to renovate a Victorian manor house in the Scottish Borders ran up debts estimated at £2million after a potential sale fell through when the property suffered major damage as a result of a heating system failure.
Details of the financial problems which bedevilled the firm behind the restoration of Cardrona House, near Innerleithen, have been revealed in a so-called Statement of Proposals by administrators appointed by a finance company due £1.5 million from the failed business.
Margo Eyre Property Development Ltd. was set up in 2019 by Jennifer Anna Marguerite Redhead-Eyre who lives in the big house under a tenancy agreement.
According to the report by administrators Michelle Elliot and Chad Griffin, of insolvency experts FRP Advisory, Ms Readhead-Eyre claims she is an unsecured creditor of the company and is owed £369,000 under a director's loan account.
A claim for £15,500 arising from 'disputed' legal fees has also been lodged by the law firm Clarity Simplicity Ltd which petitioned Selkirk Sheriff Court in May to have Margo Eyre Property Development wound up.
A month later Together Finance, the secured creditor, lodged a Court of Session notice of the appointment of administrators.
The Statement of Proposals filed at Companies House says: "The company's aim was to renovate the property [Cardrona House] to allow it to be sold at a profit. It is understood the company did not initially undertake any other trading activities and there are no other known assets".
Following the impact of COVID, the company applied for and secured Bounce Back loan support.
The administrators add: "In June 2022, the company re-financed its borrowings with a loan from Together Finance which was granted a standard security over the property and a floating charge.
"The property was marketed for sale and a deal was agreed in principle, with an expected completion date in January 2023. In December 2022 there was a failure of the heating system which resulted in significant water and other damage to the property. The purchaser subsequently withdrew from the sale".
The inability to sell the house meant Margo Eyre Property Development was unable to repay the loan owed to Together Finance. The director advised of a potential new buyer but details were not provided.
"Rescuing the company as a going concern will not be achieved", say the administrators, "as it did not have sufficient working capital to continue to trade in the short term, and insufficient assets to liquidate to satisfy creditor demands".
Even the secured creditor is unlikely to be repaid in full, explains the report. The intention is to dissolve the company as it is not anticipated there will be any funds available for distribution to unsecured creditors.
The last published accounts for Margo Eyre Property Development, covering the year to February 2023, showed an operating loss of £213,000 and net liabilities of £1.239 million. The business had no employees.
The administrators state: "An estimate of the property value has not been disclosed in order to protect commercial confidentiality ahead of the marketing process".
Cardrona House is a B-listed manorial-style property dating from 1841 and designed by prominent Scottish architect William Burn. The house was commissioned by Captain James Ker, who served in India with the 33rd Madras Regiment. The Ker family owned the Cardrona estates from 1685 until the 20th Century.
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