Duff and Phelps are finally on their way out of Scottish football. The arrival of BDO as liquidators at Ibrox is imminent.
However, let us not let D&P leave without noting some things they are good enough to have published for us all to see.
The last report Rangers – Progress Report – 24 August 2012 makes clear where the money raised for creditors has gone. Remember that D&P consider that they have, despite a £4 million trading deficit, succeeded in fulfilling the second goal of administration, namely to have achieved a better outcome for creditors than would have been achieved through liquidation without administration.
Compare the August Report with the one in July Duff Phelps Report July 2012
Amongst the details we see the costs paid by D&P to outside agents, advisers etc.
Taking them in financial order, we can see the huge sums disappearing out of the administration, all, of course, incurred in the interests of the creditors…
Before we start, please note that all the costs described are net of VAT.
This firm of English solicitors has been engaged to deal with the High Court litigation involving Collyer Bristow and Gary Withey. You will recall that the basis of this case seems to be that, by way of jiggery-pokery, Mr Whyte took over Rangers and as such deprived the company of the millions of pounds which would have been raised by a share issue, if the alternative Paul Murray plan (long before the Blue Knights were thought of) had been successful.
I am sure that these very experienced and very expensive English lawyers are pursuing the case with full confidence in it. Without seeing the pleadings and the evidence it might be silly to voice an opinion.
However, my initial opinion echoes a comment made to me by a Sheriff many years ago who was not impressed by what I thought was an ingenious, if convoluted, submission. As I valiantly argued some detailed, technical, and very precise point of pleading and interpretation, the Sheriff looked at me and growled, “That’s nonsense, isn’t it?”
That was a decision as short and to the point as my argument had been long-winded and tortuous, and on reflection he was right as well!
As at 29th June, Taylor Wessing had charged £1,283,102 in fees and £18,975 for disbursements. In addition, it had paid Counsels’ fees for £129,544 and there was still £231,988 to be paid.
As at 13th August, how has that changed?
Taylor Wessing have been paid £966,329 of the sums due to them. They are still owed £311,942. That would suggest that, between 29 June and 13 August, Taylor Wessing have not done any more work. I find that doubtful. Bearing in mind that, at the earliest, they could have become involved in mid February, their costs were running at around £300,000 per month. Is it realistic to think that for six weeks they have all gone on holiday? At a rough estimate, the creditors could be looking at another £450,000 in Taylor Wessing costs over the period covered in the reports.
By mid August £26,532 had been paid by way of disbursements. There are still £6,757 owed. Therefore £14,314 of disbursements have been incurred over the six-week period when the solicitors were not adding to the costs. Apparently.
As far as Counsels’ fees go, £235,088 have now been paid, and there is still £23,675 to pay. This is also peculiar. As at 29th June, the total sum incurred by way of Counsels’ fees was £361,532. By August 14th that sum had reduced to £258,763.
So, to conclude regarding Taylor Wessing, the solicitors incurred no costs over the six week period; disbursements nearly doubled; and Counsels’ fees were reduced by £102,769.
As the June report disclosed that the legal costs detailed above were NOT estimates, one wonders what went on. Heaven forbid that Counsel or the solicitors had overcharged. Heaven forbid too that D&P have got the figures wrong.
I am sure they can clarify this, or else the liquidators will.
But, to date, the amount spent and owing on Taylor Wessing, Counsels’ fees and disbursements totals £1,570,323.
This blue-chip Scottish firm is shown as assisting with placing the company into administration, statutory issues and legal matters such as the Ticketus Direction.
The report to 29 June showed nothing yet paid. Instead there was £398,400 owed in solicitors’ fees, £6,251 for disbursements and £116,700 for Counsels’ fees.
By mid August the position had changed. Legal fees of £358,650 had been paid, with £21,443 still owed. This totals £380,093. Therefore in the 6 weeks, the solicitors’ bill came down by £18,307.
Disbursements of £5,394 have been paid, with none owing. The figure for disbursements has therefore decreased by £317.
Finally counsels’ fees of £126,700 have been paid, showing an increase of £10,000 since the end of June.
As with Taylor Wessing therefore, costs have gone down over the six-week period, which is again odd.
To date, the amount spent and owing on Biggart Baillie, Counsels’ fees and disbursements totals £412,727.
This calculation is a good illustration of the fact that legal costs in England are far higher than Scottish costs.
Jack Irvine’s company provided “Media consultancy in relation to the Company”. In June the estimated costs were £124,000. By 13th August £112,500 had been paid. Nothing was shown as still due. The media costs were effectively incurred over a four-month period. Would the creditors be happy at spending £7,000 per week on “media consultancy”?
This company was the mailing agent, printing and sending correspondence to the company’s creditors. In the July report there was an estimate of fees of £40,000. The August report shows the sum paid was £50,719.
Oddly, as this was incurred on a fixed fee basis, one wonders how the fees increased from the estimate?
£50,000 is a lot of postage!
This company provided “Media consultancy in relation to the administration”. That sounds like PR work for D&P rather than for the company.
In any event the estimated fee was £20,000. The fee charged and paid was £28,941.
Sweeney Kincaid valued the “chattel assets” at a cost of £17,000.
Lambert Smith Hampton valued the fixed assets at a cost of £25,000.
This company provided the Data Room for prospective buyers to access information regarding the company.
Their estimated fee was, on a fixed fee basis, £20,000. The actual amount invoiced and paid was £2,184!
The estimate was what one might call “prudent”!
This is an odd one. They are listed as having been paid £6,270 for Players agents fees in the July report, but vanish from the August one!
A grand total paid, and owing, excluding VAT of £2,319,894.
What would creditors think about that expenditure?
Taylor Wessing are in for the long haul, which raises questions for the creditors about how long the administrators/liquidators will be able to fund Taylor Wessing. It seems that the case in the Hugh Court will only get to a final hearing next autumn (2013, not 2012)!
Even if the rate of costs being run up slows, as it would, then it would not be unreasonable to estimate maybe another £1 million to get to the START of the court hearing. If it is lengthy, as it could well be, the cost of the hearing itself might dwarf the costs of preparation.
Maybe in the interests of cost, D&P should se if all the parties would agree to transferring the case to the Court of Session in Edinburgh? It might not be quicker, but it would be a lot cheaper!
If the Collyer Bristow case is successful, then the money spent will have been a fine investment. That outcome might not be the favourite though.
As far as Biggart Baillie goes, their involvement was part of the process in having it declared that Ticketus could only be an ordinary creditor, and that its rights did not extend “beyond the grave”. It could be argued, and I am sure would be, that the unravelling of the Ticketus deal allowed the sale to take place. But these issues need to be looked at as a whole.
Can D&P justify all the work and costs, when the costs and charges incurred have extinguished the money paid for the asset?
The operation was a success, but the patient died, say Duff & Phelps.
Posted by Paul McConville