Semple administrator: ‘It’s difficult to begin

Semple Fraser’s collapse into administration earlier this month was entirely due to its exposure to the continuing decline in commercial property transactions in Scotland.

Administrators RSm Tenon wrote to creditors over the weekend, with a summary of the events that led to the doors being closed on 8 march.

There was no single precipitating event, despite rumours that a major client had taken its business elsewhere or their bank had pulled the plug. Joint administrator Tom maclennan said the firm was hugely dependent on the commercial property sector and that sector has declined by 15-20 per cent. There was not enough other business to tide it over.

As reported in The Scotsman last week, Semple Fraser’s turnover had appeared to recover to £12.2m according to its 2010-11 accounts. It appears it thought it had weathered the worst. However, turnover fell again to £10.4m in 2011-12.

But a crisis became apparent in stages during 2012-13. The initial partner estimate of turnover for the year was £11.7m. That was revised downwards to £11m but by September 2012 partners again reduced the projection, to £10.3m. By the next month they reduced it again to 9.6m.

efforts were made to reduce overheads by handing back a floor of its Glasgow offices to the landlord and a six-month rent holiday on the remainder was negotiated.

Cost cutting was not achieving enough and during Novem- ber 2012 approaches were made to ten to 12 firms to explore prospects for merger. On 21 December RSm Tenon presented a report to the partners on the costs and implications of any merger they might pursue. Two firms had shown some interest but considered the pain of a full merger would outweigh the prospective benefits.

A board meeting on 22 January 2013 reviewed the latest partners’ estimate of turnover, by now down to £8.8m – barely half of what it had been in 2008. partners had reduced