The Aberdeen-based housebuilding firm fell into administration on Monday, with the immediate loss of 217 jobs and hundreds of other subcontractor jobs at risk, after an attempt to sell the company fell through.

Former Aberdeen FC chairman Stewart Milne, who set up the business in 1975, said in a statement: “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 The bank has not accepted either bid and withdrawn its funding.”

Wellbeing economy secretary Neil Gray, who met with administrators Teneo after the firm was appointed, stressed the importance that support is offered to staff, contractors, suppliers and homebuyers impacted by the collapse.

Mr Gray told MSPs: “The people affected by this announcement are our immediate priority and the Scottish Government is providing support through our initiative for responding to redundancy situations, PACE.”

Mr Gray said approaches have already been received from potential recruiters for those who have lost, or are at risk of, losing their jobs.

In terms of the redundancy payments process, Mr Gray said he asked UK business minister Kevin Hollinrake to “look favourably” on the impact the firm’s collapse will have on sub-contractors.

Tory MSP Douglas Lumsden raised concerns that buyers who had paid deposits were waiting on keys or required remedial work and were seeing their life savings put “at risk”.

Mr Gray said he raised the issue with Teneo at the meeting and said he understood the administrators were discussing options with the National House Building Council (NHBC).

“My understanding is that Teneo are in discussions with the NHBC and others around ensuring that the situation that he fairly raises around the very difficult situation that people will be finding themselves in - in some cases in limbo – can be resolved,” he said.

“That will be a challenge obviously depending on the circumstances.”

But he added: “Douglas Lumsden will understand that we’re coming at this within a 24-hour period, as are Teneo, so some of this is going to be information that is moving.”

Teneo said that “no further construction” of Stewart Milne Group homes was being completed “at this time”, and said people who had reserved a home but not yet moved in would be contacted.

Unite union may sue

Trade union Unite has warned that it will explore legal action in support of its members who it said were given “no notice” about Stewart Milne Group being placed in administration.

Unite represents over 60 tradespersons at the construction company in various locations including in Aberdeen, Dundee, Edinburgh and Glasgow.

Unite general secretary, Sharon Graham, said: “The announcement that the Stewart Milne Group has been placed in administration is grim news. However, what is totally unacceptable is the workforce were given no prior warning nor has there been any consultation with Unite.

“Unite is now actively exploring all legal avenues in support of our members and it is fully determined to get them justice.”

A protective award can be awarded when 20 or more employees are made redundant because an employer did not consult before any redundancy announcement. Employment tribunals can make various awards from 45 days to 90 days of full pay.

John Clark, Unite industrial officer, added: “The actions of the Stewart Milne Group regarding the lack of consultation with the workers is potentially illegal, and it is certainly no way to treat a loyal workforce. We are in the process of contacting all our members to progress protective award claims being lodged against the company.

“It’s vital that the Scottish Government and the local authorities in which the company has a presence work with Unite to explore how we can find suitable alternative employment for the workers including on public contracts as a priority.”

Unite also urged the Scottish Government and councils to “urgently” work with it to “explore how the skilled workers can be found suitable alternative employment on public procurement contracts”.

Sector reaction

The boss of fellow north east housebuilder Chap Group has expressed his dismay over Stewart Milne Group’s demise.

Chap managing director Hugh Craigie said: “I was very sorry to hear the news about SMG. SMG and Chap are of a similar age and neighbours at Westhill.

“Accordingly, we have followed, respected and admired their growth and success over the years.

“It is sad that this fantastic success story has ended the way it has.”

Mr Craigie also said he was full of respect for Mr Milne, the entrepreneur who founded SMG in 1975.

Chap’s MD added: “Stewart’s leadership of SMG was clearly key throughout its history.

“But he has also done a great job of raising the profile of Aberdeen, both the city and its football team.

“While not always given the credit and appreciation he deserved for this, I was always appreciative of his support and efforts.

“It is a huge shame for Stewart and all his employees that a way forward could not be found for the business.”

Mike Duncan, north-east development manager for the Federation of Small Businesses, said news of SMG’s collapse would “reverberate through the supply chain and affect hundreds of local sub-contractors”.

He added: “The owners of these smaller businesses will not only find themselves out of pocket, but the knock-on effect will impact their future work plans and their ability to retain their own employees.

“The government must do what it can to halt any potential domino effect and reduce the impact on smaller businesses and the self-employed.”

“It is essential that this support can be accessed as quickly as possible.

“Administration processes take time, but local creditors will need their money to get their own companies through this worrying situation.”

Scottish Building Federation chairman Euan Clark said: “It is both alarming and disheartening for Scotland to contemplate the reported administration of Stewart Milne, an accomplished and established housebuilder.

“Over numerous decades, the company has been a significant contributor to the country’s economic vitality, with the repercussions of such a loss reverberating throughout the entire supply chain.

“This situation poses a threat to the enduring stability of a fundamental component of future economic prosperity, together with the very real impact on an untold number of affected supply chain employers and employees.”