The costs of special administration are again under close scrutiny this week as the fees for winding down Pritchard Stockbrokers hit £6.3 million and at Fyshe Horton Finney charges have now exceeded £3 million.
Although these are still tiny in comparison to the £100 million that PwC warned could be the total cost of the administration of Beaufort Securities, they underline the size of the bills paid by the unfortunate clients of failed wealth firms.
Despite the long wait and high fees, Mazars, the administrators of Pritchard did however have one piece of good news for clients in their latest update, covering the six months to 28 February.
The former auditors of the company, Creaseys, have agreed to pay £625,000 in relation to a claim brought against it concerning alleged negligence in its audits of Pritchards financial years ending 30 June 2008 and 30 June 2011 inclusive. The claim was resolved by mediation on 26 February, without admission of liability by Creaseys. However, this does not mean the end of the special administration, which has now been going on for six years.
A total of £25.7 million in claims has now been agreed with clients, equating to nearly 97% of estimated client claims. There are still 2,480 clients with outstanding claims totalling £900,000.
The resolution is also being held up by an application made to the Financial Conduct Authority (FCA) in September 2017 to allow it to set a bar date for provisions. The FCA responded with proposed amendments in January 2018. The administrators refiled in February and are expecting the FCA to approve the application ‘in the near future’.
At Fyshe Horton Finney, clients have been waiting for their money since March 2013, and once again the administrators have been unable to provide a ‘realistic timescale’ for the length of the special administration.
The joint administrators David Clements and Paul Boyle of Harrisons Business Recovery & Insolvency have said that a number of outstanding debts are part of the reason it has been held up.
They are in the process of issuing proceedings against an FX client believed to be in Thailand, who owes £384,000 to the company. In the six month period to March, they also received £229,000 from unbilled ISA management fees. In addition, two clients, with a total outstanding balance of £8,600 have started making monthly payments. Clients have received a total of £13 million to date.
In addition to the £3 million in fees and £308,000 in expenses, it is expected that the time costs to complete the administration will be around another £100,000.
The administrators said that routine work was undertaken by junior staff to maximise the cost effectiveness of the work, however, matters of particular complexity or significance were dealt with by senior staff or the joint special administrators.