Lloyds Banking Group is seeking a radical restructuring Kilmartin Holdings, amid fears that the group may go into administration.

Bank of Scotland has lent £250m to Edinburgh-based Kilmartin.

Results published on 29 May revealed that Kilmartin made a pre-tax loss of £46.7m in the year to 30 April, 2008, had £288.7m of liabilities due to be paid off within one year and an overdraft that is up for renewal in mid-2009.

Since late 2008, Bank of Scotland Corporate and subsequently Lloyds have been in crisis talks with the developer, with a view to restructuring it and staving off its collapse.

With backing from 50%-owner Bank of Scotland Corporate, Kilmartin accelerated its £1.3 billion development programme in 2007 as other property developers started to rein in their plans.

The most likely option for Kilmartin, according to property sources, is that Lloyds will parachute in Kevin McCabe, founder of developer Scarborough, to take control of the group.

Sunday Times