Carvill Group Limited (in administration)

Transcription

1 Joint administrators progress report from 20 May 2016 to 19 November 2016 Carvill Group Limited (in administration) 16 December 2016 High Court of Justice in Northern Ireland, Chancery Division Case no of D420Nv2

2 Contents Abbreviations and definitions 2 Key messages 3 Overview of what we ve done to date 5 Progress since we last reported 6 Appendix A: Receipts and payments 8 Appendix B: Remuneration update 10 Appendix C: Other information 17

3 Abbreviations and definitions The following table shows the abbreviations and insolvency terms that may be used during this report: Abbreviation or definition Company Administrators firm Meaning Carvill Group Limited in administration Stephen Cave and Toby Underwood PricewaterhouseCoopers LLP IR91 Insolvency Rules (Northern Ireland) 1991 IA86 Insolvency Act 1986 Promontoria Cerberus Promontoria Ram Limited Cerberus Capital Management IO89 Insolvency (Northern Ireland) Order 1989 Sch.B1 IO89 Schedule B1 to the Insolvency (Northern Ireland) Order 1989 HMRC prescribed part secured creditors preferential creditors RPS unsecured creditors HM Revenue & Customs The amount set aside for unsecured creditors from floating charge funds in accordance with section 150A IO89 and the Insolvency (Northern Ireland) Order 1989 (Prescribed Part) Order (Northern Ireland) 2006 Creditors with security in respect of their debt Claims for unpaid wages earned in the four months before the insolvency up to 800, holiday pay and unpaid pension contributions in certain circumstances Redundancy Payments Service, an executive agency sponsored by the Department for Employment and Learning, which authorises and pays the statutory claims of employees of insolvent companies under the Employment Rights (Northern Ireland) Order 1996 Creditors who are neither secured nor preferential Carvill Group Limited in administration 2

4 Key messages Why we ve sent you this report I m writing to update you on the progress of the administration of the Company in the six months since our last report dated 16 June You can also view all our earlier reports on our website at How much creditors may receive The following table summarises the possible outcome for creditors*, based on what we currently know. Class of creditor Current estimate (p in ) Previous estimate (p in ) Secured creditors Uncertain Uncertain Preferential creditors Unsecured creditors nil nil *Please note this guidance on dividends is only an indication and should not be used as the main basis of any bad debt provision or debt trading. Secured creditors The Company was primarily financed by Northern Bank (t/a Danske Bank) and Ulster Bank with secured lending of c. 83m outstanding at the date of administration. This lending is secured by way of fixed and floating charges over all of the Company s assets. There are also cross company guarantees in operation across the wider Carvill Group. The majority of the assets over which Danske Bank held fixed charges have now been realised and Danske Bank will suffer a significant shortfall on its lending. The final level of recovery for Danske Bank will be dependent on the level of funds available from the remaining floating charge realisations (after the final assets have been realised and preferential creditors have been paid in full). To date, the value of distributions made to Danske Bank total 2,350,064 In the administration, Ulster Bank have sold the economic interest in its secured debt to Promontoria, an entity affiliated with Cerberus. The ultimate level of recovery for Promontoria will be dependent on the realisable value of the remaining fixed charge asset, the Sirocco Quay site, however there is expected to be a significant shortfall. A total of 3,852,893 has been distributed under Ulster Banks secured charge to date. In summary, the secured creditors will suffer a significant shortfall on their security over the Company s assets. Preferential creditors On appointment the secured lenders agreed to pay employee arrears on the basis that these would rank as a subrogated claim. This was critical to securing employee co-operation and for the Administrators to gain a detailed understanding of the asset portfolio. Subsequently, preferential creditors were issued with proof of debt forms and were given a deadline of 28 April 2016 by which to respond. The total value of preferential claims received was 14, All preferential creditors were subsequently repaid in full on 5 July This included an amount of 5,785 to the secured creditors, through their subrogated claim for pre-administration wages paid. Carvill Group Limited in administration 3

5 Unsecured creditors We think the Company s unsecured creditors total 2.4m. As previously reported, due to the level of realisations expected for the remaining assets and the level of secured debt, there will no distribution to unsecured creditors. The Prescribed Part is not applicable in this case as Danske Bank s floating charge pre-dates the coming into force of the Insolvency (Northern Ireland) Order 1989 (Prescribed Part) Order (Northern Ireland) What you need to do This report is for your information and you don t need to do anything. Carvill Group Limited in administration 4

6 Overview of what we ve done to date As explained in our earlier reports, we continue to realise the assets of the Company. We remain in office to continue realising the Company s assets and to distribute any surplus funds to the secured and preferential creditors of the Company. When we last reported, the key outstanding matters in the administration were as follows: the sale of the leasehold interest in the car parking spaces at the Embankment development; the realisation of Sirocco Quay; the continued collection of the Company s ground rents portfolio; and ongoing discussions with the Carvill family regarding settlement of the Company s intercompany balances. Carvill Group Limited in administration 5

7 Progress since we last reported Realisation of assets Fixed charge assets Embankment Development As outlined in my previous report, a sales agent had been engaged to market and sell the Company s leasehold interest in the Embankment Development, together with a number of car parking spaces owned by the Company. Following a lengthy period of marketing a number of offers were received and the sales process was drawn to a conclusion. The Administrators have formally accepted an offer to buy the assets and it is hoped the sale will complete in early January Sirocco Quays, Belfast I advised in my last report that we had been informed by Promontoria that it had agreed a sale of the loans/security associated with this asset. The Administrators continue to liaise with Promontoria regarding this sale and understand it will complete during the first quarter of As previously advised, following the completion of the loan sale, the Administrators will meet with the new secured lender to discuss next steps regarding the site. Floating charge assets Ground rents The Administrators have continued to collect ground rents due to the Company on a quarterly basis, until the overall sale of the portfolio concludes. A total of 87k has been collected during the course of the Administration. Inter-company balances Discussions with representatives from the Carvill family in relation to the balances owing, have continued during the period covered by this report. It is been established that the two German group entities which owe significant intercompany balances to the Company are clearly insolvent. The directors of the two German entities are currently finalising a legal action in Germany which could secure further realisations, following which both entities will be placed into a formal insolvency procedure. The Administrators hope to receive a small dividend in relation to the balances due, however this cannot be quantified until the conclusion of the referenced legal action. Carvill Group Limited in administration 6

8 Investigations and actions The Administrators have undertaken a review of the Company s affairs for the period leading up to the Administration and have fulfilled their reporting obligations in compliance with their obligations under The Company Directors Disqualification (Northern Ireland) Order 2002 and Statement of Insolvency Practice No.2. No matters have come to light to suggest that further investigation work is necessary. Our receipts and payments account We set out in Appendix A an account of our receipts and payments in the administration from 20 May 2016 to 19 November Our fees We set out in Appendix C an update on our remuneration which covers our fees, disbursements and other related matters in this case. Creditors rights Any request for further information about the Administrators remuneration or disbursements should be made in writing. In addition, should you consider the Administrators remuneration is excessive and this is supported by 25% in value of the creditors, you have the right to challenge the amounts in accordance with Rule of IR91. This information can also be found in Appendix 3 of the Remuneration of Insolvency Office Holders (Northern Ireland) at: You can also get a copy free of charge by telephoning Lee Panther on Next steps We expect to send our next report to creditors at the end of the administration or in about six months, whichever is the sooner. If you ve got any questions, please get in touch with Lee Panther on Yours faithfully For and on behalf of the Company Stephen Cave Joint administrator Stephen Cave and Toby Underwood have been appointed as Joint Administrators of Carvill Group Limited to manage its affairs, business and property as its agents and act without personal liability. Stephen Cave is licensed to act as an Insolvency Practitioner in the United Kingdom. The licence is granted in Ireland by Chartered Accountants Ireland. Toby Underwood is licensed in the United Kingdom to act as an Insolvency Practitioner by the Institute of Chartered Accountants in England and Wales. The Joint Administrators are Data Controllers of personal data as defined by the Data Protection Act PricewaterhouseCoopers LLP will act as Data Processor on their instructions. Personal data will be kept secure and processed only for matters relating to the Administration. The Joint Administrators are bound by the Insolvency Code of Ethics which can be found at: Carvill Group Limited in administration 7

9 Appendix A: Receipts and payments Receipts (fixed) Brought forward at 19/05/2016 From 20/05/2016 to 19/11/2016 Total Funding from chargeholder (fixed) 848, , , Insurance claims 10, , Sale of property - Annadale (fixed charge) 2,439, ,439, Sale of property - Colinglenn Road 27, , Sale of property - Comber Road 435, , Sale of property - Heath Lodge 20, , Sale of property - Levaghery Road 12, , Sale of Property - Lyndhurst View Park 30, , Sale of property - Utility Street/ Eureka Drive (fixed charge) 115, , Sale of property - Woodbrook (fixed charge) 175, , Sale of property - Woodbrook (net amount- see Note 1) 86, , ,199, , ,210, Payments (fixed) Advertising (3,098.30) - (3,098.30) Agents fees (35,582.03) - (35,582.03) Annadale - retention paid back to purchaser (43,479.00) - (43,479.00) Cleaning & site clearance (1,265.00) - (1,265.00) Distribution to chargeholder (Danske Bank) (2,350,064.00) - (2,350,064.00) Distribution to chargeholder (Ulster Bank)(see Note 1) (174,000.00) - (174,000.00) Employee Related costs (Wages, PAYE, NIC, expenses) (252,560.63) - (252,560.63) Heat, Light and Power (40,561.62) (40,006.65) Insurance (69,453.76) - (69,453.76) IT Costs (7,420.32) - (7,420.32) Lease/ hire & storage charges (26,329.83) - (26,329.83) Legal fees & disbursements (126,322.98) - (126,322.98) Motor expenses (3,585.86) - (3,585.86) Office Holder's Fees (310,000.00) - (310,000.00) Professional Fees - Annadale (3,788.77) - (3,788.77) Professional fees - other (19,383.08) - (19,383.08) Professional Fees - Sirocco (408,376.47) - (408,376.47) Professional Fees - Woodbrook (164,652.37) (6,630.00) (171,282.37) Repairs and maintenance (5,314.02) - (5,314.02) Service Charges (93,309.32) - (93,309.32) Subcontractors (29,300.00) (9,007.10) (38,307.10) Telephone and Fax (12,007.03) - (12,007.03) (4,179,854.39) (15,082.13) (4,194,936.52) Carvill Group Limited in administration 8

10 Receipts (floating) Brought forward at 19/05/2016 From 20/05/2016 to 19/11/2016 Total Book debts Ground rents collected 79, , , Equity share buy-out - 12, , Holiday pay contribution from Construction First 2, , Interest received gross Refunds 18, , Sale of motor vehicles 18, , Sale of plant & machinery 168, , Third party funds 1, , , , , Payments (floating) Bank Charges (8,654.45) (61.71) (8,716.16) Legal fees & disbursements (1,208.00) (908.00) (2,116.00) Office Holder's Fees (25,000.00) - (25,000.00) Postage, Stationary and Printing (226.05) - (226.05) Rent paid (18,402.74) - (18,402.74) (53,491.24) (969.71) (54,460.95) VAT Control Account (27,285.31) (11,446.41) (38,731.72) Preferential distribution (100p in the ) (14,430.01) (14,430.01) Total held 228, (11,616.85) 216, Note 1- Sale of Woodbrook In accordance with Statement of Insolvency Practice 7 the below note shows the gross to net reconciliation in relation to the sale of the remaining Woodbrook lands as the funds passed through the solicitors' client account: Sale of property- Woodbrook 3,728, VAT received 43, ,771, Less costs deducted at source Management company costs (6,870.57) 3,764, Distribution to Promontoria Ram Limited (3,678,643.47) Net proceeds 86, Carvill Group Limited in administration 9

11 Appendix B: Remuneration update Our fees were approved on a time costs basis, limited to agreed caps at various stages, by the secured creditors in respect of the fixed charge assets, and secured and preferential creditors in respect of the floating charge assets. To 19 November 2016 we have drawn fees on account of 310,000 and 25,000 respectively in line with the approval given, as shown on the enclosed receipts and payments accounts. The time cost charges incurred in the period covered by this report are 60,600. This amount does not necessarily reflect how much we will eventually draw as fees for this period. Total incurred time costs will not be recovered in full. We set out later in this Appendix details of our work to date, anticipated future work, disbursements, subcontracted work and payments to associates. Our time charging policy and hourly rates We and our team charge our time for the work we need to do in the administration. We delegate tasks to suitable grades of staff, taking into account their experience and any specialist knowledge that is needed and we supervise them properly to maximise the cost effectiveness of the work done. Anything complex or important matters of exceptional responsibility are handled by our senior staff or us. All of our staff who work on the administration (including our cashiers, support and secretarial staff) charge time directly to the case and are included in any analysis of time charged. Each grade of staff has an hourly charge out rate which is reviewed from time to time. Work carried out by our cashiers, support and secretarial staff is charged for separately and isn t included in the hourly rates charged by partners or other staff members. Time is charged in six minute units. The minimum time chargeable is three minutes (i.e units). We don t charge general or overhead costs. We set out below the maximum charge-out rates per hour for the grades of our staff who already or who are likely to work on the administration. Grade Up to 30 June 2016 ( ) From 1 July 2016 ( ) Partner Director Senior manager Manager Senior associate (qualified / unqualified) 130 / / 106 Associate Support staff We call on colleagues in our Tax, VAT, Real Estate and Pensions departments where we need their expert advice. Their specialist charge-out rates vary but the following are the maximum rates by grade per hour. Grade Up to 30 June 2016( ) From 1 July 2016 ( ) Partner 1,130 1,250 Director 1,040 1,175 Senior manager Manager Senior Associate / consultant Associate / assistant consultant In common with many professional firms, our scale rates may rise to cover annual inflationary cost increases. Carvill Group Limited in administration 10

12 Payments to associates We have paid nothing to associates in the period covered by this report. Carvill Group Limited in administration 11

13 Our hours and average rates Aspect of assignment Partner (Hrs) Director (Hrs) Senior Manager (Hrs) Manager (Hrs) Senior Associate (Hrs) Associate (Hrs) Support (Hrs) Total (Hrs) Time cost Average hourly rate 1 Accounting and treasury , Creditors , Other assets Property , Statutory and compliance , Strategy & Planning , Tax VAT , Total for the period , Brought forward at 19 May , Total , * Please note that the total incurred time costs will not be recovered in fees with a total of 325,000 having been drawn on account to date. Carvill Group Limited in administration 12

14 Our work in the period Earlier in this section we have included an analysis of the time spent by the various grades of staff. Whilst this is not an exhaustive list, in the following table we provide more detail on the key areas of: - Area of work Work undertaken Why the work was necessary Accounting and treasury Creditors Property Statutory and compliance Strategy and Planning Management of funds held; Processing of receipts and payments; Undertaking bank reconciliations; and Dealing with charge-holder funding receipts and reconciling receipts and payments with the correct charge-holder. Responding to creditor enquiries; Adjudicating preferential claims; Calculation of preferential dividend; and Payment of preferential dividend. Ongoing collection of ground rent; Marketing of property and locating potential buyers for the Embankment Development ; Exploring options of future development of Sirocco Quays Completing estimated outcome statements; and Maintaining the Company s property assets utilities, sub-contractors and maintenance. Completing and distributing ninth progress report; Companies House filings; and Filing of ongoing case work. Case management; Team strategy meetings; and Review of case by appointment taker To enable the effective management of the Company s estates bank account. In accordance with statutory and regulatory requirements to keep proper accounting records. Proper stewardship of the Company s money. To distribute funds back to preferential creditors to fulfil the statutory purpose of the administration. To maintain and secure the Company s assets. To maximise receipts into the insolvency estate. To enable future planning of the case and to provide the secured creditor with updates regarding their likely recovery. To fulfil the Company s statutory obligations. To maintain records in accordance with regulatory guidelines and best practise. To facilitate the successful management of the case and the on-going realisation of assets. Periodic reviews by appointment takers as required by the administrators regulatory body. VAT Submission of post-appointment VAT returns To reclaim VAT into the estate and to comply with legal obligations. Carvill Group Limited in administration 13

15 Our future work We still need to do the following work to achieve the purpose of administration. Area of work Accounting and treasury Closure Creditors Property Statutory and compliance Strategy and Planning Tax and VAT Work we need to do The on-going management of Company s banking facilities; and On-going payments and receipts. Filing notice of dissolution at Companies House; and Obtaining tax and VAT clearances from Her Majesty s Revenue and Customs. Responding to creditor queries; and On-going liaison with the secured creditors. Completing a sale of the Embankment development; Deciding upon a strategy for the realisation of Sirocco Quays; On-going collection, and eventual sale, of ground rents; and Investigating any potential recoveries under inter-company balances. Completion and distribution of six monthly progress report; and Completing Companies House filings. Periodic reviews of case by appointment takers; and Team strategy meetings. Continuing submission of VAT returns; and Continuing submission of corporation tax returns. Carvill Group Limited in administration 14

16 Disbursements We don t need to get approval to draw expenses or disbursements unless they are for shared or allocated services provided by our own firm, including room hire, document storage, photocopying, communication facilities. These types of expenses are called Category 2 disbursements and they must be directly incurred on the case, subject to a reasonable method of calculation and allocation and approved by the same party who approves our fees. Our expenses policy allows for all properly incurred expenses to be recharged to the administration has been approved by the secured and preferential creditors where required. The following disbursements arose in the period of this report. Category Policy Costs incurred 2 Photocopying - at 3 pence per sheet copied, only charged for circulars to creditors and other bulk copying. - 2 Mileage - At a maximum of 63 pence per mile (up to 2,000cc) or 81 pence per mile (over 2,000cc) - 1 All other disbursements reimbursed at cost: Archiving Postage Total 1, Our relationships We have no business or personal relationships with the parties who approve our fees or who provide services to the administration where the relationship could give rise to a conflict of interest. Details of subcontracted work No work has been subcontracted in the period. Carvill Group Limited in administration 15

17 Legal and other professional firms We ve instructed the following professionals on this case in the period: Service provided Name of firm / organisation Reason selected Basis of fees Paid in the period Legal services Arthur Cox Solicitors Experience Fixed fee - Legal services A&L Goodbody Experience Fixed fee 908 Property agents Woodbrook valuations Property agents Woodbrook Article 40 planning permission Property agents Woodbrook share certificates Colliers International Experience Fixed fee 4,750 TSA Planning Experience Fixed fee 1,680 CSM Estate Agents Experience Fixed fee 200 Carvill Group Limited in administration 16

18 Appendix C: Other information Court details for the administration: Company s registered name: Trading name: Registered number: Registered address: Date of the joint administrators appointment: Joint administrators names and addresses: Extensions to the initial period of appointment: Appointor s / applicant s name and address: Split of the joint administrators responsibilities: The European Regulation on Insolvency Proceedings (Council Regulation (EC) No 1346/2000 of 29 May 2000) Proposed end of the administration High Court of Justice, Northern Ireland Chancery Division, 8003 of 2011 Carvill Group Limited n/a NI Waterfront Plaza, 8 Laganbank Road, Belfast, BT1 3LR 20 May 2011 Stephen Cave of PwC LLP, Waterfront Plaza, 8 Laganbank Road, Belfast, BT1 3LR (appointed 27 June 2013); and Toby Underwood of PwC LLP, Benson House, 33 Wellington Street, Leeds, LS1 4JP (appointed 20 May 2011). Paul Rooney acted as joint administrator from 20 May 2011 to 27 June 2013 A 24 month extension to 19 May 2016 was granted by the Court in April Subsequently a further 24 month extension was granted to 19 May 2018 in May The directors of the Company, c/o Derriaghy Industrial Estate, Dunmurry The Joint Administrators shall be entitled exercise all of their functions as such administrators jointly and severally, so that all functions may be exercised by any or all of the joint administrators The European Regulation on Insolvency Proceedings applies to this Administration and the proceedings are main proceedings. It is anticipated that there will be no dividend payable to unsecured creditors, the Administrators will file notice under Paragraph 85 Sch.B1 IO89 with the Registrar of Companies, following registration of which the Company will be dissolved three months later. Carvill Group Limited in administration 17