By Scott Wright
UNSECURED creditors of Watt Brothers are expected to be left more than £4 million out of pocket following the collapse of the historic department store group in October.
Watt Brothers, which was established in 1915, fell into administration after pressure on margins, sparked by the growth in online retailing and the broader downturn on the high street, dragged it into the red. An attempt to find new investment was unsuccessful.
Administrators Alistair McAlinden and Blair Nimmo at KPMG immediately made 229 out of the 306-strong workforce redundant with the closure of 10 stores, while trading continued at its flagship store on Glasgow’s Sauchiehall Street to clear outstanding stock.
Ultimately, the remaining staff had either resigned or had been made redundant by the time the company ceased trading on Sauchiehall Street on December 15.
In an administrators’ report filed at Companies House, which became available yesterday, KPMG said: “Based on current estimates, it is unlikely that there will be a dividend to unsecured creditors.”
READ MORE: Watt Brothers: End of the road confirmed for stricken Glasgow department store
The amount owed to unsecured creditors, including trade, was £4.4 million.
The administrators anticipate that a dividend will be distributed to preferential creditors, however. The total amount of outstanding preferential claims from employees is estimated to be £175,000.
“Claims from employees in respect of (1) arrears of wages up to a maximum of £800 per employee, (2), unlimited accrued holiday pay and (3) certain pension benefits, rank preferentially,” the administrators said.
The report states that £227,094.25 was paid in wages, Pay As You Earn (PAYE) tax and National Insurance contributions to staff who were retained to run the Sauchiehall Street store after the administrators were appointed until its closure. It also notes that payments totalling £57,387.31 were paid, relating to outstanding wage arrears to the retained employees before the appointment of administrators.
READ MORE: Jobs go as Remnant Kings falls into administration
“Based on current estimates, we anticipate that preferential creditors may receive a dividend,” the report states. “The quantum and timing of this will depend upon the level of future asset realisations and the payment of associated costs.”
Watt Brothers owns the freehold of the Sauchiehall Street property, subject to a standard security in favour of Royal Bank of Scotland. The bank also holds a floating charge over the company’s assets.
According to the report, the outstanding debt to Royal Bank, after set off of cash at bank balances, is approximately £1,266,988. The administrators state that they anticipate the bank will receive a distribution under the standard security, but not under the floating charge.
Property agent CBRE is continuing to market the building and to manage the premises while they are empty. The administrators at KMPG have so far run up fees of £964,686.60. A 12-month extension to the administration was recently approved by the secured creditor and preferential creditors until October 2021.
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