Liquidators escape £73m clean-up bill for Scottish Coal

Open cast mining Scottish Coal operated a number of opencast mines until its collapse earlier this year

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Liquidators of the Scottish Coal mines operation have escaped responsibility for a £73m clean-up bill.

The decision by a senior judge has left a question mark over who will pay.

The Court of Session in Edinburgh was told the final bill linked to the Scottish Coal Company's (SSC) open cast mining sites would make the sites too costly to maintain.

To bring the areas into compliance with planning conditions could cost £73m, Lord Hodge was told.

Mining has stopped at the sites but pumping operations are continuing.

So too is work linked to public safety, including fence maintenance and the carrying out of statutory obligations to protect the environment.

These costs alone are running at £478,000 each month.

Joint liquidators Blair C Nimmo and Gerard A Friar had gone to court to seek legal guidance about their responsibilities.

They revealed that parts of the SCC's operations, including mines and future sales, could bring in between £9.7m and £10.5m.

But it was stated money which might otherwise go to creditors of the failed company was being eaten up by the costs of maintaining sites still on SCC's books.

At the present rate, the liquidators said no money would be left in 20 months at the sites, including Broken Cross in South Lanarkshire and House of Water in East Ayrshire.

The others are St Ninian's in Fife and Damside in North Lanarkshire, which will see restoration work carried out, and Chalmerston in East Ayrshire, where a planning application is being submitted to open up new reserves.

As discussion focussed on the clean-up costs legal debate centred on the principle of a liquidator abandoning property, which, the court heard, was unprecedented in Scots law.

Potential costs

The lawyers were unable to find any case law which shows a liquidator to abandon property.

As potential costs may eventually may eventually fall to the taxpayer, the Scottish Environmental Protection Agency, Scottish Natural Heritage, East Ayrshire Council and South Lanarkshire Council were also involved in the hearing.

Lord Hodge looked to civil law in Germany and the Netherlands to see how things were done there and concluded that the liquidators could abandon the sites.

However, they must hold talks with the Keeper of the Registers of Scotland to decide how such an "unprecedented transaction" could be recorded.

As part of a deal, Durham-based coal firm Hargreaves Services is to re-start operations at five opencast coal mines, close down SCC and plans to hire 300 people over three months, rising to 500 within a year.

The company is not taking ownership of the five mines, due to the costs linked to restoration once the mineworking is finished.

It is, however, spending £8.4m to buy some assets from the liquidators.

KPMG was appointed in April after SCCL folded, with the loss of 600 jobs.

It has struggled to find a buyer for the assets, because of the complex issue of transferring responsibility for site restoration.

Hargreaves believes there is not sufficient income from the sites to pay the costs of restoring the land but plans to invest a further £25m into its Scottish mining operations and to site its UK surface mining headquarters in Scotland.

Hargreaves will operate the mines for coal extraction and for restoration work, and it will market an estimated one million tonnes of coal per year.

East Ayrshire Council said it is likely to appeal against the judgement.

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