Casco Limited (in administration)

Transcription

1 Joint administrators progress report from 19 February 2017 to 18 August 2017 Casco Limited (in administration) 8 September 2017 High Court of Justice, Chancery Division, Companies Court Case no of 2016

2 Contents Abbreviations and definitions ii Key messages iii Overview of what we ve done to date iv Progress since we last reported v Appendix A: Receipts and payments ix Appendix B: Expenses xi Appendix C: Remuneration update xiii Appendix D: Pre-administration costs xxv Appendix E: Other information xxvi Casco Limited PwC Contents

3 Abbreviations and definitions The following table shows the abbreviations and insolvency terms that may be used in this report: Abbreviation or definition Company Administrators firm Meaning Casco Limited Matthew Boyd Callaghan and David Christian Chubb PricewaterhouseCoopers LLP IR16 Insolvency (England and Wales) Rules 2016 IA86 Insolvency Act 1986 Sch.B1 IA86 Schedule B1 to the Insolvency Act 1986 HMRC VAT HM Revenue & Customs Value added tax Reporting Period 19 February 2017 to 18 August 2017 prescribed part secured creditors preferential creditors unsecured creditors ROT claims SOA JPA LX AA LX Aero AMP The amount set aside for unsecured creditors from floating charge funds in accordance with section 176A IA86 and the Insolvency Act 1986 (Prescribed Part) Order 2003 Creditors with security in respect of their debt, in accordance with section 248 IA86 Claims for unpaid wages earned in the four months before the insolvency up to 800, holiday pay and unpaid pension contributions in certain circumstances Creditors who are neither secured nor preferential Claims to retention of title over goods supplied to the Company but not paid for before the Administrators appointment Statement of Affairs a statement of the estimated financial position of the Company on the date of administration provided by the directors J.P. Associates LXA Aviation Assets Ltd Logix Aero Ltd Airline MRO Parts (AMP) Inc, purchasers of the bulk of the Company s stock ii

4 Key messages Why we ve sent you this report I m writing to update you on the progress of the administration of Casco Limited in the six months since our last report dated 17 March You can still view our earlier reports on our website at Please get in touch with Chris Sykes on or at chris.sykes@uk.pwc.com if you need any of the passwords to access the reports. 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 Preferential creditors Unsecured creditors *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. We don t think the secured creditor will be fully repaid its lending of 2m out of its security over the Company s assets. We believe that preferential creditors will be paid in full. Detail about preferential creditors is included in later in the report. We think the Company s unsecured creditors will total between 3.2m and 7.7m, and will get a maximum dividend of 1.5p in the from the prescribed part based on what we know currently. The amount of any dividend and when it would be paid are dependent on future asset realisations and costs of the administration. We ve started asking for outstanding claims from unsecured creditors so that we can agree them for dividend purposes. What you need to do If you haven t already done so, please send your claim to us so that we can agree it. A claim form can be downloaded from our website at or you can get one by telephoning Chris Sykes on iii

5 Overview of what we ve done to date You ll remember from our Proposals for achieving the purpose of administration that when we were appointed, the position was as follows: The Company had been set up to trade in aircraft spares for the aerospace industry. We were appointed because the Company had entered into two consignment agreements with LXAA and could not afford to meet its financial obligation as and when they fell due. The Company attempted to rationalise costs by making all staff redundant and trading its stock via a consignment agreement with LX Aero. The Company was facing: Withdrawal of supplier support; Disputed debts / counterclaims: and A creditor s application to appoint administrators. Immediately on our appointment we carried out a review of the Company s financial position and decided the most appropriate strategy to realise key assets was to enter into a renegotiated short term consignment agreement with LX Aero. We then explored alternative stock consignment or bulk sale strategies. We secured and took control of the Company s assets, which included: Stocks; Plant and equipment; Motor vehicles; Book debts; and Corporation tax receivable During the Reporting Period we completed the realisation of the Company s stock, plant and equipment and motor vehicles. We remain in office to realise the Company s book debts and a terminal loss relief claim. We are also exploring a number of pre-administration transactions to determine if there is an opportunity to generate further realisations for creditors. Other outstanding matters include agreeing and paying preferential claims and making a distribution to the secured creditor. Should funds be available for unsecured creditors via the prescribed part fund, we will commence a claims agreement process and make a distribution to unsecured creditors. iv

6 Progress since we last reported Consignment agreement and stock sale As noted in our Proposals, immediately following our appointment we terminated the trading arrangements with LX Aero and began negotiations to enter into a revised consignment agreement. It was considered efficient to continue with a renegotiated short term consignment arrangement with LX Aero whilst we explored alternative consignment or bulk stock sale strategies and we entered into a formal consignment agreement with LX Aero on 1 September Upon exchanging contracts with AMP for a bulk asset sale on 11 January 2017 we terminated our consignment agreement with LX Aero. During the Reporting Period we finalised our account with LX Aero and realised stock sales of $81,354 after allowing for costs of getting stocks into a saleable state and LX Aero s commission under the consignment agreement. The bulk stock sale to AMP was treated as zero rated for VAT but the purchaser has also deposited in escrow an amount that would be due to HMRC if the sale was subject to VAT at the standard rate. We are reviewing AMP s export certificates to support the current VAT treatment and once satisfied, the funds held in escrow will be returned. Alternatively, should the evidence not support the current VAT treatment we will remit the funds held in escrow to HMRC. During the Reporting Period we worked with AMP to identify and extract their stock from the Company s former trading premises. An extension to an initial time limit was granted so AMP could complete this process in exchange for penalty payments of 5,000. As reported previously, the Company held certain stock which it owned in joint names with third parties. We reached an agreement to sell our interest in these stocks for $60,000, and the funds have been paid in full. All stock assets have now been realised in full. The realisations from the stock have totalled $1,105,374, compared with an estimated value in the directors SOA of $593,682. Chattel assets The Company owns various pieces of plant, equipment, motor vehicles, fixtures and fittings. We instructed European Valuations to provide guidance and sales assistance on the realisation of chattel assets. During the Reporting Period we realised a van for 10,416. We also realised 1,179 from fixtures and fittings. As reported previously, we agreed the sale of warehouse racking to Barrie Roberts, who is a director of the Company (and the landlord of the property from which the Company operated) for 10,000 plus VAT following formal valuation advice from European Valuations. These funds were received during the Reporting Period. Prior to the appointment of administrators, Barrie Roberts acquired a vehicle from the Company that he later sold at a profit of 4,026. The administrators requested that these funds be transferred to the administration estate for the benefit of creditors and the funds were remitted during the Reporting Period. The Company s chattels assets have now been realised in full. Book debts At the date of appointment the Company had book debts totalling c 1.0m. The ledger included one significant debt (c 0.5m) which is disputed, whilst there are also a number of old overseas debts which we consider are difficult to recover. v

7 We engaged JPA as specialist debt collection agents to realise the majority of book debts on a conditional fee basis. During the Reporting Period, JPA recovered book debts of 2,106 (after deducting commissions of 591 plus VAT) During the Reporting Period we have also identified third party funds of $17,937 which were previously reported as book debt realisations and have reallocated those in the receipts and payments account accordingly. These funds will be remitted to the third party in due course. We are now considering commencing litigation against a number of debtors with unpaid balances and continue in our efforts to realise unpaid book debts with the assistance of JPA. We will provide an update in our next progress report. Terminal loss relief We have carried out a review of the Company s financial records and believe a terminal loss relief claim is due to the Company in relation to corporation tax paid over the last three years of trading. Corporation tax returns for the final pre-administration trading period have been prepared and show a large trading loss incurred during the final period. The returns have been submitted to HMRC and a refund of prior paid corporation tax has been requested. You should note that HMRC have a right to offset amounts owing to them against any terminal loss relief claim and, accordingly, the potential realisable value of a successful claim would be reduced. We will provide a further update on this matter in our next report to creditors. Litigation We continue to assess the merits of claims the Company may have against third parties and explore opportunities to generate further realisations for creditors. Stock held as consignee As reported previously, the Company held stock on consignment from 18 different third parties made up of circa 50,000 lines of stock. We have made extensive efforts to identify and contact the consignors, assisting with the return of their assets as far as reasonably possible. The Company had invested funds in repairing and certifying consignment stock in anticipation of future sales and we have sought to recover these costs where possible. During the Reporting Period we realised a total of 7,462 and $3,850 through successfully recharging these costs. These receipts are included within sundry floating assets at Appendix B. Following the administrators exit from the Company s former trading premises in April 2017, responsibility for repatriating a small amount of remaining consignment stock held was passed to the landlord of the premises. Other assets and sundry refunds During the Reporting Period we have been able to realise business rates refunds of 14,478 in relation to the former trading premises. Site clearance costs of 1,180 were also recovered from the landlord. Connected party transactions As previously noted above, we sold warehouse racking during the Reporting Period to Barrie Roberts, a director of the Company. The assets were sold for 10,000 plus VAT following formal valuation advice from Euro Valuations and the funds have been remitted to the administration estate. Also as noted above, prior to the appointment of administrators, Barrie Roberts also acquired a vehicle from the Company in exchange for paying off the finance secured against the asset in full. During the administration period the vehicle was sold and achieved a sale price 4,026 higher than the value paid for the asset. We vi

8 requested that the funds be transferred to the administration and they were remitted in full during the Reporting Period. We are aware of a number of connected party transactions which occurred prior to our appointment and details can be found in our Proposals. Extension of the administration On the 12 July 2017 we sent notice of a decision by correspondence to the preferential creditors requesting a 12 month extension of the term of the administration to 18 August A decision date of 31 July 2017 was set and the extension resolution was approved. The secured creditor also approved a 12 month extension of the term. Notice to extension was circulated to all relevant parties on 8 August Investigations and actions As previously disclosed we have complied with our obligations to submit information to the Insolvency Service on the conduct of the Company s directors in the period prior to the administration. We continue to investigate various transactions prior to the administration as noted earlier in this report. Our receipts and payments account We set out in Appendix A an account of our receipts and payments in the administration from 19 February 2017 to 18 August Our expenses We set out in Appendix B a statement of the expenses we ve incurred to the date covered by this report and an estimate of our future expenses. The statement excludes any potential tax liabilities that we may need to pay as an administration expense in due course because amounts due will depend on the position at the end of the tax accounting period. 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. Pre-administration costs You can find in Appendix D information about the approval of the unpaid pre-administration costs previously detailed in our proposals. Creditors rights Creditors have the right to ask for more information within 21 days of receiving this report as set out in Rule 18.9 IR16. Any request must be in writing. Creditors can also challenge fees and expenses within eight weeks of receiving this report as set out in Rule This information can also be found in the guide to fees at: You can also get a copy free of charge by telephoning Chris Sykes on vii

9 What we still need to do We continue to realise the Company s assets, including: - book debts - terminal loss relief claim - investigation and potential recovery of pre-administration transactions Once asset realisations have been completed, we will agree and pay preferential claims and make a distribution to the secured creditor. Should funds be available for unsecured creditors via the prescribed part fund, we will commence a claims agreement process and make a distribution to unsecured creditors. Next steps Once all realisable assets have been recovered and outstanding administration matters completed, we will make a distribution to the secured creditor, preferential creditors and unsecured creditors via the prescribed part fund. We will then end the administration and move the Company to dissolution. 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 Chris Sykes, on Yours faithfully For and on behalf of Casco Limited David Christian Chubb Joint Administrator David Christian Chubb and Matthew Boyd Callaghan have been appointed as joint administrators of Casco Limited to manage its affairs, business and property as its agents without personal liability. Both are licensed in the United Kingdom to act as Insolvency Practitioners by the Institute of Chartered Accountants in England and Wales. The joint administrators are bound by the Insolvency Code of Ethics which can be found at: 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. viii

10 Appendix A: Receipts and payments Sterling Account Total for the period from 19 August 2016 to 18 February 2017 Mov em ents in the period Total for the period from 19 August 2016 to 18 August 2017 SOA Value Floating charge receipts Stock (notes 1 & 2) ,192 Plant & Machinery 6,000 14,443 20,443 29,952 Fixtures & Fittings (note 2) 3,500 11, ,67 9 Debtors (note 3) 23,056 2,697 25, ,7 35 Terminal Loss Relief Claim Sundry Assets & Recharges (note 2) 4, ,800 33,07 9 Transfer from currency accounts (note 4) 39, , ,97 2 Bank Interest Gross Third Party Funds (note 3) 17,512-17,512 93, , , ,87 9 Floating charge paym ents Direct Expenses 1, ,102 Sub Contractors 25,889 8, ,968 Heat & Light 1,27 5 3,558 4,833 Telephone 2,192-2,192 Repairs & Maintenance Sundry Expenses Duress Payments Rent - 45,000 45,000 Business Rates - 41,122 41,122 Insurance - 30,307 30,307 Pre-administration Legal Fees Creditor Administration Application Court Order - 15,965 15,965 Legal Fees & Disbursements - 15, ,07 6 Administration Pre-admin Fees - 18,814 18,814 Administrators' Fees - 200, ,000 Administrator's Disbursements Agents Fees & Disbursements 4,497 22,618 27,115 Professional Fees 1,7 10-1,7 10 Debt Collection Fees 1, ,046 Storage Costs 2,914 1,455 4,369 Statutory Advertising Bank Charges , , ,984 Net Floating Charge Assets 50, , ,495 VAT Control account (4,994) (50,7 60) (55,7 54) Balance at Bank 45, , , Stock realisations have been paid into the US Dollar account (see next page) and realised $1,105,374 to date. The SOA value stated in the US Dollars at the exchange rate applying on the date of administration is $593, Receipts of 5,000 which were included as stock realisations in our last progress report have been identified as being 1,000 relating to fixtures and fittings and 4,000 relating to stock repair recharges (sundry assets). These costs been reallocated in the accounts above. 3- Receipts of 17,512 which were previously included in book debt realisations in our last progress report have now been reallocated to third party funds. 4 During the reporting period we transferred $868,586 from our USD account and 1,157 from us Euro account to our administration GBP account. The transfer equated to 639,494 at the relevant exchange rates. ix

11 US Dollar Account T otal for the period T otal for the period Movem ents in the from 19 August 2016 from 19 August 2016 period to 18 February 2017 to 18 August 2017 $ $ $ Floating charge receipts Stock 968, ,354 1,109,37 4 Recharged Stock Repairs 7 5,852 3, ,7 02 Debtors (note 1) 86,411-86,411 1,130, ,204 1,27 5,487 Floating charge pay m ents Direct Expenses 18, ,481 35,352 Pre-admin legal expenses 2,055-2,055 Legal Fees & Disbursements 84, ,7 14 Bank Charges Transfer to Sterling Account (note 2) - 868, , , , ,912 Net Floating Charge Assets 1,024,532 (7 39,957 ) 284,57 5 VAT Control account (14,522) - (14,522) Balance at Bank 1,010,010 (7 39,957 ) 27 0, Sundry receipts of 750 received in previous period have been identified and reallocated to debtor receipts. 2 During the reporting period we transferred $868,561 to our administration GBP account. Euro Account T otal for the period from 19 August 2016 to 18 February 2017 Mov em ents in the period T otal for the period from 19 August 2016 to 18 August 2017 Floating charge receipts Debtors 1,17 1-1,17 1 1,17 1-1,17 1 Floating charge payments Bank Charges Transfer to Sterling Account (note 1) - 1,157 1, ,157 1,17 1 Net Floating Charge Assets 1,157 (1,157) - VAT Control account Balance at Bank 1,157 (1,157) - 1 During the reporting period we transferred 1,157 to our administration GBP account. x

12 Appendix B: Expenses The following table provides details of our expenses. Expenses are amounts properly payable by us as administrators from the estate and includes our fees, but excludes distributions to creditors. The table also excludes any potential tax liabilities that we may need to pay as an administration expense because amounts becoming due will depend on the position at the end of the tax accounting period. The table should be read in conjunction with the receipts and payments account at Appendix A, which shows expenses actually paid during the period and the total paid to date Brought forward from preceding period Incurred in the period under review Cumulative Estimated future Anticipated total Initial estimate Variance GBP Expenses Utilities & Direct Expenses 7,712 1,665 9,377 3,500 12,877 11,860 1,017 Subcontractors 25,889 8,079 33,968-33,968 29,520 4,448 Repairs & Maintenance ,630 (3,868) Sundry Expenses (465) Duress Payments ,067 (81) Rent 35,000 10,000 45,000-45,000 45,000 - Business Rates 32,062 9,160 41,222-41,222 37,000 4,222 Insurance 28,000 2,027 30,027-30,027 25,000 5,027 Legal Fees & Disb 15,076-15,076 15,000 30,076 15,000 15,076 Agents Fees & Disb 23,000 4,115 27,115-27,115 26,000 1,115 Professional Fees 1,710-1,710-1,710 1, Debt Collection Fees 1, ,057-2,057 1, Storage Costs 2,914 1,455 4,369 2,000 6,369 3,372 2,997 Statutory Advertising Bank Charges Total Costs Before Admin Fees 174,950 37, ,287 20, , ,059 30,912 Administrators Fees 676, , ,400 60, , , ,400 Administrators Disb 11, ,782 1,000 13,782 14,800 (1,018) Total Costs 863, ,386 1,011,469 81,684 1,093, , ,294 Brought forward from preceding period Incurred in the period under review Cumulative Estimated future Anticipated total Initial estimate Variance US Dollar Expenses $ $ $ $ $ $ $ Direct Expenses 18,871-18,871-18,871 18,871 - Legal Fees & Disb 84,714-84,714-84,714 85,150 (436) Agents Fees & Disb 16,481-16,481-16,481-16,481 Bank Charges Total 120, , , ,233 16,078 xi

13 We think that our expenses will exceed the initial estimate provided to all creditors due to extended time required to realise and deal with the Company s recoverable assets, including: - book debts - terminal loss relief claim - investigations into potentially challengeable transactions - removal of AMP bulk asset sale Whilst the costs of holding the stock at the former trading premises and costs of realisation are higher than our initial estimates, the realisations achieved from the stock has been considerably higher than first anticipated at nearly double the value estimated in the directors SOA. Our fees have been approved on a time costs basis and have therefore been illustrated in the table above at the cost accrued using PwC scale rates for the hours worked by various grades of staff. This amount does not necessarily reflect how much we will eventually draw as fees as this is subject to separate agreement with the secured and preferential creditors. As stated earlier in this report, we believe there will be sufficient realisations in the administration to enable a distribution to be made to the secured creditor and repayment of the preferential creditors in full. We also think the Company s unsecured creditors will be paid a dividend of up to 1.5p in the from the Prescribed Part fund. xii

14 Appendix C: Remuneration update Our fees were approved on a time costs basis by the secured and preferential creditors. To 18 August 2017 we have drawn fees of 200,000 in line with the approval given, as shown on the enclosed receipts and payments account. The time cost charges incurred in the period covered by this report are 110,077, representing 380 hours at an average hourly rate of 290 per hour. Total time costs charged in the administration to date amounts to 786,400, made up of 2,269 hours at an average hourly rates of 347. This amount does not necessarily reflect how much we will eventually draw as fees as this is subject to separate agreement with the secured and preferential creditors. We think that our time costs will exceed our initial estimate of c 739,000. An explanation for why our costs are higher is set out later in this Appendix. We also set out details of our work to date, anticipated future work, disbursements, subcontracted work and payments to associates. Our hours and average rates Casco Limited - in administration Analysis for time costs for the period 19 February 2017 to 18 August 2017 Aspect of assignment Partner Director Senior Manager Manager Senior Average Cummulative Cummulative Associate Associate Secretarial Total hours Time cost hourly rate hours cost Strategy & Planning , , Secured creditors , , Assets , , , Inv estigations , , Creditors , , Accounting and treasury , , Statutory and compliance , , Tax & VAT , , Em ploy ees & pensions , , Total for the period , , , Total brought forward 1, , Total 2, , xiii

15 Initial estimated total costs Actual to 18 August 2017 Variance Category of work Hours Time Average Hours Time Average Hours Time costs hourly rate costs hourly rate costs ( 000) ( /hour) ( 000) ( /hour) ( 000) 1. Strategy & Planning Secured Creditors Assets 1, Investigations Creditors (57) 1 6. Accounting & Treasury Statutory & Compliance (15) 1 8. Tax & VAT (6) 9. Employees & Pensions Total hours and fees estimate Prescribed Part total hours and fees estimate 2, , (113) (31) The bulk asset sale took longer to complete as did moving the stock off site. Certain of these costs were recovered from the purchaser, but this meant that staff were involved in completing the transaction for a much longer period than was expected. In addition, negotiations to realise value from the joint venture stocks were protracted. This eventually realised $60k in the current period. Overall the amount realised for stock has been nearly double the value estimated in the directors SOA. The book debt ledger has been challenging to realise, with complex trading arrangements, international debtors and a debtor profile that had a considerable value compromising long outstanding amounts. Information provided by creditors has warranted further investigations that would not usually be required on a simple statutory basis. This work may lead to further realisations in due course. As a result of the above additional work, the time spent on asset realisations, investigations and the broader realisation strategy has been higher than originally anticipated. This has led to additional realisations for the administration and further realisations are possible. We will continue to liaise with the secured creditor prior to drawing any fees. xiv

16 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 Regional Up to 30 June 2017 From 1 July 2017 Partner Director Senior manager Manager Senior associate qualified Senior associate unqualified Associate Support staff Grade - London Up to 30 June 2017 From 1 July 2017 Partner Director Senior manager Manager Senior associate qualified Senior associate unqualified Associate Support staff xv

17 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 2017 From 1 July 2017 Partner 1,250 1,315 Director 1,150 1,210 Senior manager 1,040 1,230 Manager Senior Associate / consultant Associate / assistant consultant Support staff In common with many professional firms, our scale rates may rise to cover annual inflationary cost increases. Payments to associates No payments were made to associates in the period of this report. xvi

18 Our work in the current and prior period Earlier in this section we have included an analysis of the time spent by the various grades of staff. The following table provides details for the work we have done in the Reporting Period ( ) and work completed in the previous period ( ). It provides a brief summary for each category rather than an exhaustive list of all possible tasks:- Area of work Work undertaken Why the work was necessary What, if any, financial benefit the work provided to creditors OR whether it was required by statute Strategy & planning Completing tasks relating to job acceptance Preparing fee budgets and cost monitoring Holding team meetings and discussions regarding status of administration Complying with statutory duties and legal requirements for money laundering and antibribery Costs budgets used for monitoring and control Used for planning and project managing the many different work streams and monitoring staff in different departments and locations Mostly these are statutory requirements, but the strategy an project management work will assist in the efficient completion of the administration Secured creditors Notifying secured creditors of appointment Preparing reports to secured creditor Responding to secured creditor s queries Giving notice per statutory requirement Preparing formal reports to the secured creditor and preparing estimates of likely outcomes Providing further information on request No direct financial benefit to unsecured creditors Assets Stock Reviewing stock values Identifying potential interested parties Liaising with interested parties and obtaining non-disclosure agreements Preparing and sending out a trade circular Reviewing offers for stock Finalising stock sales to interested parties Overseeing the collection of sold stock Return of consignment stock to consignors Identifying and listing stock holdings for marketing purposes Marketing stock holding for sale or long term consignment. Analysis and comparison of consignment and bulk asset strategies Negotiating with interested parties and completion of asset sale agreement. Contractual agreement with AMP to assist with recovery Mitigating unsecured claims This work has contributed to the stock sales of $988k and short term net consignment sales of $121k. Realisations of 11k & $62k in recharged repairs and mitigation of creditor claims Property / stock holding matters Liaising with landlords and suppliers Attending on site Maintaining purchase order registry Reviewing reporting from the short term consignment agreement Liaising with council regarding rates position Setting up supplier accounts and issuing undertakings for services required for stock holding costs during short term consignment and bulk stock marketing process. Finalising administration and property holding costs incurred. xvii

19 Debtors Reviewing and assessing debtors ledgers Debt collection Assisting and monitoring JPA with debt collection strategies This work has generated book debt realisations of 25k and $86k. Chattel assets and other assets Reviewing asset listings Liaising with valuers Reviewing status and sales process of chattel assets Ensuring that value was recovered for all realisable assets This work has led to asset realisations of 35k. Insurance Identifying potential issues requiring attention of insurance specialists Reviewing insurance policies Corresponding with insurer regarding initial and ongoing insurance requirements Agreement and settlement of insurance premiums Ensuring that all assets were insured to limit loss to the estate and mitigate risk No direct financial benefit to creditors from this work. Third party assets Reviewing leasing documents Liaising with owners/lessors Repatriating leased assets to lessors and mitigating creditor claims. This work has had a financial benefit to lessors. Investigations Collecting company s books and records where related to investigatory work Reviewing books and records Reviewing specific transactions and liaising with directors regarding certain transactions Preparing investigation file and lodging findings with the Department for Business, Energy and Industrial Strategy Investigating potential realisations for creditors from pre-administration transactions Reporting on the conduct of the directors in the 3 years prior to the administration. We believe there may be realisations generated through challenging a number of preadministration transactions Statutory requirement to submit a report to DBEIS Creditors Uploading documents to a dedicated website for ongoing communications and reports Receiving and following up creditor enquiries via telephone, and post Reviewing and preparing correspondence to creditors and their representatives Receipt and filing proofs of debt when not related to a dividend Uploading progress reports in line with our statutory duty Dealing with general creditor queries and gathering information necessary to agree claims This work will contribution to the claims agreement process when distributing the prescribed part funds to unsecured creditors. xviii

20 Accounting & treasury Opening bank account and arranging facilities Entering receipts and payments into accounting system. Dealing with receipts, payments and journals not relating to trading Carrying out bank reconciliations Corresponding with bank regarding specific transfers Necessary to keep accurate financial records of receipts and payments Ensuring good stewardship of monies on behalf of creditors Statutory requirements with no direct financial benefit for creditors other than good stewardship of funds. Statutory & Compliance Proposals and initial meeting of creditors Drafting and reviewing a statement of proposals to creditors including preparing receipts and payments accounts and statutory information Circulating notice of the proposals to creditors, members and the Registrar of Companies Providing background to the failure of the company and the appointment of administrators. Giving an overview of the administrators strategy for achieving the objective of the administration. Statutory requirements with no direct financial benefit for creditors. Progress reports and extensions Other meetings / resolutions Preparing and issuing periodic progress reports to creditors and the Registrar Making applications to creditors or court for the extension of the administration and filing relevant notices if necessary Preparing documents and information for the purpose of obtaining approval to fees, Category 2 disbursements and other matters in the administration Issuing resolutions to be considered by correspondence Providing an update on the progress and status of the administration and likely returns to creditors Extending the term of the administration to allow full realisation of assets and distributions to creditors Approving the basis of the administrator s fees and disbursements Books and records Collecting company books and records where not related to investigatory work Dealing with records in storage Sending job files to storage Retaining statutory and accounting records in line with legal requirement Remuneration report Preparing and circulating to creditors a report giving details of the work we expect to carry out during the case, and the expenses that are likely to be incurred Providing information on the administrators budgeted time costs and expenses for the assignment in advance of seeking fee approval. Other statutory and compliance Filing of documents Updating checklists and diary management system Management of statutory and practical matters and good record keeping xix

21 Tax & VAT Tax Gathering information for the initial tax review Carrying out tax reviews and subsequent enquiries Liaising with HMRC Preparing, submitting and progressing a claim for terminal loss relief Ensuring compliance with legal tax obligations. Recovering tax relief assets for the benefit of creditors Generally this work is a legal and statutory requirement, however we believe there may be a significant realisation from a terminal loss relief claim submitted to HMRC. VAT Gathering information for initial tax review Carrying out VAT reviews and subsequent enquiries Preparing VAT returns Liaising with HMRC Ensuring compliance with legal tax obligations. Employees & Pensions Notifying pension providers of the appointment Submitting returns to Redundancy Payments Service Dealing with enquiries from former employees Statutory requirement Assisting employees/directors with submitting claims for statutory entitlements. Providing information on request to former employees. This work has resulted in a payment to a former employee from the Redundancy Payments Service xx

22 Our future work We still need to do the following work to achieve the purpose of administration. Area of work Work we need to do Estimated cost Whether or not the work will provide a financial benefit to creditors Strategy & planning Monitoring cost Holding team meetings and discussions regarding status of administration Secured creditors Preparing reports to secured creditor Responding to secured creditor s queries Making distributions in accordance with security entitlements 8,000 Mostly these are statutory requirements, but the strategy an project management work will assist in the efficient completion of the administration 2,000 Direct benefit to secured creditor via payment of secured distribution Assets / Debtors Reviewing and assessing debtors ledgers Debt collection 8,000 We think there will be limited future debtor realisations Investigations Reviewing specific transactions and liaising with directors regarding certain transactions Reviewing books and records 10,000 We believe there may be realisations generated through challenging a number of preadministration transactions Creditors General creditor enquiries Receiving and following up creditor enquiries via telephone, and post Reviewing and preparing correspondence to creditors and their representatives Receipt and filing proofs of debt when not related to a dividend 1,000 Direct benefit to creditors through distribution of the Prescribed Part fund. Preferential creditors Reviewing and agreeing preferential creditor claims Advertising intention to declare dividend Preparing correspondence to creditors announcing declaration of dividend Preparing and paying distribution 1,000 Direct benefit to preferential creditors through dividend payment xxi

23 Prescribed Part distribution to unsecured creditors Preparing correspondence to some 205 potential creditors inviting lodgement of proof of debt Receiving proofs of debt and maintaining register Adjudicating claims, including requesting further information from claimants Preparing correspondence to claimant advising outcome of adjudication and advising of intention to declare dividend Advertising intention to declare dividend Calculating dividend rate and preparing dividend file Preparing correspondence to creditors announcing declaration of dividend Preparing and paying distribution Consulting with tax specialists as needed in relation to HMRC claims 31,000 Direct benefit to creditors through distribution of the Prescribed Part fund. Accounting & treasury Entering receipts and payments into accounting system. Closing bank account Dealing with receipts, payments and journals not relating to trading Carrying out bank reconciliations Corresponding with bank regarding specific transfers 5,000 Statutory requirements with no direct financial benefit for creditors other than good stewardship of funds. Statutory & Compliance Progress reports and extensions Preparing and issuing periodic progress reports to creditors and the Registrar Making applications to court for the extension of the administration and filing relevant notices if necessary 15,000 Statutory requirements with no direct financial benefit for creditors Other statutory and compliance Filing of documents Updating checklists and diary management system Tax & VAT Closing Matters Progressing claim for Terminal Loss Relief Preparation and submission of final corporation tax returns to HMRC. Preparation and submission of VAT returns to HMRC. Dealing with HMRC enquiries. Withdrawing undertakings not relating to trading and obtaining clearances from third parties Completing checklists and diary management system Closing down internal systems 6,000 Potential recovery of a terminal loss relief claim. 4,000 Statutory requirements with no direct financial benefit for creditors xxii

24 These costs are estimated at the time of writing. The 31k cost estimate for agreeing and distributing the prescribed part fund is not included within the administrators costs at Appendix B as these costs will be deducted directly from the prescribed part fund prior to distribution. 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 and has been approved by the secured and preferential creditors. The following disbursements arose in the period of this report. Category Policy Photocopying - at 5 pence per sheet copied, only charged for circulars to creditors and other bulk copying. Mileage - At a maximum of 71 pence per mile (up to 2,000cc) or 93 pence per mile (over 2,000cc) All disbursements not falling under Category 2 are recharged at cost Travel Accommodation and subsistence Postage Refunded disbursements Costs incurred (609.11) Total 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. xxiii

25 Legal and other professional firms We ve instructed the following professionals on this case: Service provided Name of firm Reason selected Basis of fees Legal advice, including: Drafting sale and purchase agreement Dealing with all legal matters around sale of business Drafting management agreement Drafting consignment stock release letter General advice on the administration appointment General adhoc trading advice Taylor Wessing LLP Industry knowledge / insolvency expertise Time costs and disbursements Agent services, including: Stock valuation services Realisation of plant and machinery Debt collection Hilco, European Valuations, JP Associates Industry knowledge / insolvency expertise Fixed fee and commission Professional advice, including: Independent advice for the director in preparing SOA FRP Advisory Industry knowledge / insolvency expertise Fixed fee We require all third party professionals to submit time costs analyses and narrative or a schedule of realisations achieved in support of invoices rendered. In review the appropriateness of profession costs, we consider: comparison with upfront budgets; review of time costs analysis; review of disbursements claimed; and ongoing dialogue with regards to the work being performed. xxiv

26 Appendix D: Pre-administration costs The following costs incurred before our appointment with a view to the Company going into administration were approved for payment in part on 6 April All approved pre-administration costs have been paid in full during the Reporting Period as set out in the table below and also illustrated at Appendix B. Nature of costs Incurred ( ) Approved ( ) Paid ( ) Fees charged by the administrators 31,356 18,814 18,814 Disbursements incurred by the administrators nil nil nil Expenses Incurred by the Administrators Taylor Wessing LLP* 1,803 1,803 1,803 Total 33,159 20,617 20,617 *paid from US Dollar account at relevant exchange rates. Court Order for Creditors Application Costs In addition to the costs set out above, 15,965 has been paid to Gateley LLP in respect of legal costs and disbursements. These costs were incurred pre-administration in connection with an unsuccessful creditors application to appoint administrators over the Company. This treatment is in-line with a court order which made the creditor s reasonable legal costs payable as a first charge expense of the administration. xxv

27 Appendix E: Other information Court details for the administration: Company s registered name: High Court of Justice, Chancery Division, Companies Court 5037 of 2016 Casco Limited Trading name: Casco Registered number: Registered address: Date of the joint administrators appointment: Joint administrators names, addresses and contact details: Extension to the initial period of appointment: Central Square, 29 Wellington Street, Leeds, LS1 4DL 19 August 2017 Matthew Boyd Callaghan and David Christian Chubb of PricewaterhouseCoopers LLP, 7 More London Riverside, London, SE1 2RT Contact Chris Sykes on The administration was extended for a further 12 months on 31 July 2017 xxvi