pwc Joint liquidators progress report from i6 May 2016 to 15 May 2017 Broadway Tyres (Wholesale) Limited (in liquidation)

Transcription

1 Joint liquidators progress report from i6 May 2016 to 15 May 2017 Broadway Tyres (Wholesale) Limited (in liquidation) 12 July 2017 pwc

2 Contents Appendix D: Other information 17 Appendix C: Remuneration update 11 Appendix B: Expenses 10 Appendix A: Receipts and payments 9 Progress since we last reported 6 Outcome for creditors 5 Abbreviations and definitions 2 Key messages 3 Overview of what we ve done to date 4 Broadway Tyres (Wholesale) 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 Meaning Company Liquidators firm Broadway Tyres (Wholesale) Limited Ian Oaldev Smith and Zeif Hussain PricewaterhouseCoopers LLP 1Ri6 Insolvency (England and Wales) Rules 206 1A86 Insolvency Act 1926 CVL HMRC prescribed part secured creditors preferential creditors RPS unsecured creditors Creditors voluntary liquidation HM Revenue & Customs The amount set aside for unsecured creditors from floating charge hinds in accordance with section 176A IA$6 and the Insolvency Act 1986 (Prescribed Part) Order 2003 Creditors with security in respect of their debt, in accordance with Section 24$ IA$6 Generally, claims for unpaid wages earned in the four months before the insolvency up to 8oo, holiday pay and unpaid pension contributions in certain circumstances Redundancy Payments Service, an executive agency sponsored by the Department for Business, Energy and Industrial Strategy, which attthorises and pays the statutory claims of employees of insolvent companies under the Employment Rights Act 1996 Creditors who are neither secured nor preferential 2

4 Secured creditors n/a n/a Preferential creditors ioop loop Current estimate Previous estimate Class of creditor (pin) (pin) How much creditors may receive Why we ve sent you this report Key messages Unsecured creditors 0.5 report dated 14 July I m writing to update you on the progress of the liquidation of the Company in the 12 months since our last You can still view our earlier reports on our website at The following table summarises the possible outcome for creditors*, based on what we currently know. uncertain Ptease note this guidance on dividends is onty an indication and shoutd not be used as the main basis ofany bad debt provision or debt trading. 1.5 What you need to do purposes. downloaded from our website at or you can get one by telephoning Sian Lamont or If you haven t already done so, please send your claim to us so that we can agree it. A claim form can be Jenny Hayes on /5059. We ve started asking for outstanding claims from unsecured creditors so that we can agree them for dividend This report is for your information and you don t need to do anything. 3

5 Overview ofwhat we ve done to date This is our sixth progress report. Yoti may wish to refer to our previous reports which can be found at Te remain in office to realise the remaining assets of the Company and to enable a distribution to be made to unsecured creditors. When we last reported, the key outstanding matters in the liquidation were as follows: Investigating potential realisations regarding the directors loan account; Investigating potential realisations regarding the remaining claim against a third party; Adjudicating upon unsecured creditor claims; and Paying a dividend to unsecured creditors. 4

6 or Outcomefor creditors Secured creditors We are aware that the secured creditors, Cable Finance Limited and SOBNT Limited, received payment by the former joint administrators. Cable finance Limited were paid in full while SOBNT Limited received a payment under it s fixed charge security. A total of 3,041,778 was distributed in the administration. Preferential creditors (mainly employees) We paid a dividend of ioop in the totalling 22,669 to preferential creditors on 31 October Unsecured creditors Dividends become available for unsecured creditors when there are sufficient hinds (after costs of the liquidation) to pay the secured and preferential creditors in hill, with an amount left over. In certain circumstances, part of the amount available for secured creditors may be ringfenced for the benefit of unsecured creditors. This prescribed part is paid out of net property, which is floating charge realisations after costs, and after paying setting aside enough to pay preferential creditors in hill. But it only has to be made available where the floating charge was created on or after 15 September The prescribed part applies in this case as there is a floating charge created after 15 September The amount of the prescribed part is: 50% of net property up to 10,000; 20% of net property above io,ooo; and Subject to a maximum of 6oo,ooo. However, as previously disclosed, as the floating chargeholder was paid in hill in the previous administration process, the prescribed part in this case is theoretical as these hinds will be added to the general surplus available to creditors. We think a dividend of up to 1.5 pence in the may be paid to the unsecured creditors based on what we know currently. We ve calculated this based on the total value of claims received to date. The claims process has yet to conclude, and therefore this figure may well alter once this process is finished with the expily of a notice of intended dividend. The amount of the dividend will depend on the final level of submitted claims, hiture realisations and liquidation costs. The current status of claims can be found in the table below: Status No. of claims Value of claims SoA value (i k) received (k) Yet to be adjudicated 8 1, Admitted 103 5,635 5,770 Agreed nil claims 17 nil 282 Awaited 68 n/a 368

7 Progress since we last reported Realisation ofassets Directors loan account As previously disclosed, the loan account relates to the Company s claim against the bankruptcy estate of Jonathan West. The former joint administrators had previously agreed a settlement with Mr. Jonathan West, a former director of the Company, over his directors loan account. The settlement included a condition that should he become bankrupt, the full balance of his directors loan account (i469,ooo) would become payable. Mr West was subsequently declared bankrupt on 28 January following his bankruptcy the Company was the largest creditor in Mr. West s bankruptcy estate. The liquidation estate had a significant interest in the bankruptcy and any assets of the bankruptcy that could result in funds being remitted by means of a dividend for the benefit of the liquidation. In order to fully investigate the matter, on 2$ January 2016 one of the liquidators, Ian OakleySmith, was appointed as his Trustee in bankruptcy. This strategy was derived from conversations and meetings with the liquidation committee who wanted to ensure Mr West s ability to repay his loan account was fully scrutinised. Being appointed as Trustee in bankruptcy gives certain investigatory powers that assist in this regard. In the period the Trustee made numerous lines of enquiry into Mr West s affairs to see if there were any possible assets that could be realised for the benefit of the estate. Unfortunately, Mr OakleySmith reached the same conclusion as the Official Receiver, that there were no assets available to fund a dividend. We reported the results of our enquiries to the liquidation committee and they agreed that there was no further actions the Trustee could realistically pursue. Consequently Mr OakleySmith ceased to act as Trustee on 12 April 2017 and the bankruptcy has now been concluded. At the time of the last report, the Liquidation committee had agreed that the Liquidation estate would indemnify any costs incurred by the Trustee in bankruptcy s to a limit of 32,000. A total of 16,1o1 plus VAT was eventually incurred in relation to this work and as no realisations were made, this full amount was paid under the indemnity. The remaining claim As disclosed in our previous report, the remaining claim relates to a claim the Company is pursuing against a third party. Due to commercial sensitives, we are unable to unable to disclose the identity of the third party, or the expected realisable amount of the claim. An offer for settlement has been agreed by both parties and it is hoped the legal formalities will be concluded shortly. 6

8 Statutory and compliance Tax matters The corporation tax return for the year ending 15 May 2016 is under preparation VAT matters AVAT426 form was submitted in the period to reclaim VAT of 13,790, from HMRC. To date this has yet to be refunded. Liquidation committee On 13 January 2011 at the initial meeting of creditors in the preceding administration, creditors decided to form a committee. Following our appointment as joint liquidators, the creditors committee formed in the preceding administration became the liquidation committee. The liquidation committee currently consists of the following members: 1. Pirelli Tyres Limited 2. Goodyear Dunlop Tyies UK Limited 3. Continental Tyre Group Limited 4. R&RC Bond (Wholesale) Limited We continue to speak with the liquidation committee to discuss issues and outline key decisions. We last met with the liquidation committee on 8 December Investigations and actions Nothing has come to our attention during the period under review to suggest that we need to do any more work in line with our duties under the Company Directors Disqualification Act 1986 and Statement of Insolvency Practice No.2. Our receipts and payments account We set out in Appendix A an account of our receipts and payments in the liquidation from i6 May 2016 to 15 May 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 a liquidation expense in due course, because amounts due will depend on the position at the end of the tax accounting period. Ourfees We set out in Appendix C an update on our fees, disbursements and other related matters. Creditors rights Creditors have the right to ask for more information within 21 days of receiving this report as set out in Rule R86. Any request must be in writing. Creditors can also challenge our fees and expenses within eight weeks of receiving this report as set out in Rule R86. This information can also be found in the guide to fees at: porate,/files/technical/insolvency/creditors guides/2o17/liquidationscreditorfeeguide6a pril2o;7.ashx?la=en You can also get a copy free of charge by telephoning Lee Panther on

9 What we still need to do We still need to finalise the recovery of the remaining claim (as mentioned before). In addition, we intend to pay a first and final distribution paid to unsecured creditors. Notice of the intended dividend will be issued shortly when a final date for proving will be disclosed. Finally, the remaining statutory obligations of the Joint Liquidators need to be fulfilled including obtaining tax clearance from HMRC, sending a final report and closing of the Company s files. Next report We expect to send our next report to creditors at the end of the liquidation or in about 12 months, whichever is the sooner. If you ve got any questions, please get in touch with Lee Panther on Yours faithfully Ian Oakley Smith Joint liquidator ]anoalcley Smith and ZeIfHussain have been appointed as joint tiquidators ofbroadway Tyres (Whotesale Limited. IanOakley Smith and ZetfHussain are both licensed in the United Kingdom to act as insolvency practitioners by the Institvte of Chartered Accountants in England and Wales. The joint tiquidators are bound by the Insolvency Code ofethics which can be found at: Thejoint tiquidatars aie Data Gontrotters ofpersonal data as defined by the Data Protection Act 199$. PricewaterhouseCoapers LLP wilt act as Data Processor on theit instiuthons. Personal data wilt be kept secure and processed onty for matters relating to the liquidation. 8

10 in (19,321.20) (50,000.00) 509, , , , (1,497.99) (2,892.16) (3,789.55) (25.75) (405.80) (300.00) (6,292.15) (16,000.00) (17,857.43) (147.24) Appendix A: Receipts and payments Broadway Tyres (Wholesale) Limited Summary of financial information as at 15 May2017 Creditors Voluntary Liquidation Receipts & Receipts & payments to Movements in the payments to Estimated 75 May2016 period 15 May2017 outcome Receipts Administration surplus: prescribed part 39, , , Administration surplus: general 509, , Bookdebts 64, , Funds from sale of Retail 125, , Gross interest 5, , , Recoveries from investigations uncertain Refunds 4, , , Tax refunds 68, , , ,47526 uncertain Payments Administrators disbursements (1,497.99) Administrators insurance premium (2,892.16) Agents fees (3,789.55) Bank charges (25.75) Committee mipenses (405.80) Depositforlegaltees (20,000.00) 20, (1,497.99) (2,892.16) (3,789.55) (125.75) (405.80). IT costs (300.00) (300.00) Legal fees and disbursements (100,280.49) (8,299.00) (108,579.49) (133,579.00) Liquidators disbursements (2,178.75) (2,038.66) (4,217.41) (4,417.41) Liquidators fees (394,577.67) (444,577.67) (499,587.00) Liquidators pre appointment fees (6,292.15) (6,292.15) Professional fees (16,000.00) (16,000.00) Refund of book debt to Traoc (17,857.43) (17,857.43) Statutory advertising (147.24) (247.24) Storage costs (20,624.85) (9,011.26) (29,636.11) (30,436.00) Trustees fees paid under indemnity (inc irrecoverable VAT) (19,321.20) (19,321.20) (586,869.83) (68,670.72) (655,539.95) (736,748.68) VATcontrol account (8.33) (13,869.78) (13,878.11) 0.00 Available to preferential creditors (82,112.64) 148, uncertain Less distribution to preferential creditors (loop in ) (22,669.34) 000 (22,669.34) (22,669.34) Funds in hand 207, (82,112.64) 125, Available to unsecured creditors uncertain Unsecured creditors (estim ated) 6.520, p in the distribution to unsecured creditors (estimate) Funds are held in an interest bearing account 9

11 300 8,299 9, Appendix B: Expenses The following table provides details of our expenses. Expenses are amounts properly payable by us Liquidators from the estate and includes our fees, excludes any potential tax liabilities that we may need to pay becoming due will The table should be read but excludes distributions to creditors. as a The table liquidation expense because amounts depend on the position at the end of the tax accounting period. in as also conjunction with the receipts and payments account at Appendix A, which shows expenses actually paid dttring the period and the total paid to date. Brought forward from preceding period Incurred in the period Paid in the under period review Cumulative Estimated Anticipated future total Administrators disbursements 1498 Administrators insurance premium. 2,892 2,892 Agents fees. 3,790 3,790 Bank charges Committee expenses Deposit for legal fees* IT costs 300 Legal fees and disbursements (8,299) 108,579 25, ,579 Liquidators disbursements 2, (2,039) 5, ,266 Liquidators fees 54,283 73,761 (50,000) 522,621 25, ,621 Liquidators pre appointment fees 6,292 6,292 Professional fees 16,000 16,000 Statutory advertising Storage costs (9,011) 29, ,436 Trustees fees paid under indemnity (19,321) 19,231 19,231 Total 56, ,025 (88,670) 719,184 51, ,684 A 20,000 deposit was reftinded to the liquidation estate during this period. 10

12 Our fees are approved on a time costs basis by the liquidation committee on a periodic basis. This approval In addition, the Company provided an indemnity to cover the costs of appointing Ian OakleySmith as a trustee Grade Up to 30 June 2016 () From 1 July 2016 () supervise them properly to maximise the cost effectiveness of the work done. Anything complex or important 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. For the avoidance of doubt, work carried out by our cashiers, charged by partners or other staff members. Time is charged in three minute units (I.e units). We don t part of this indemnity the creditors committee agreed to indemnify from the Company for costs and Appendix C: Remuneration update Our time charging policy and hourly rates payments account. subsequently r6,ioi plus VAT of 3, was paid. subcontracted work and payments to associates. support and secretarial staff is charged on a time costs basis and is included in the analysis of hourly rates charge general or overhead costs. matters of exceptional responsibility are handled by our senior staff or us. grades of staff, taking into account their experience and any specialist knowledge that is needed and we allows tis to draw fees by reference to the time properly given by us and our staff in dealing with the liquidation. To date we have drawn fees of 444,578 in line with the approval given, as shown on the enclosed receipts and in bankruptcy over the estate of Jonathon West, in order to use the powers of a trustee to aid investigations. As We set out later in this Appendix details of our work to date, anticipated ftiture work, disbursements, We and our team charge our time for the work we need to do in the liquidation. We delegate tasks to suitable All of our staff who work on the liquidation (including our cashiers, support and secretarial staff) charge time We set out below the maximum chargeout rates per hour for the grades of our staff who already or who are likely to work on the liquidation. Partner Director Senior manager Manager Senior associate Senior associate Associate Support staff qualified unqualified r

13 We call on advice. colleagues in our Tax, VAT, Real Estate and Pensions departments where we need their expert Their specialist chargeout rates vary but the following are the maximum rates by grade per hour. Grade from Up to 30 June 2016 (&) r July 2016 () Partner 1,190 1,250 Director 1,095 1,150 Senior manager Manager Senior Associate Associate / / consultant assistant consultant Support staff In common with many professional firms, our scale rates may rise to cover annual inflationary cost increases. 12

14 Assocte Our hours and average rates Totalfortheperiod , Aspect of assignment.. Average Partner. Senior Senior. Director Manager Associate Support. Total Time cost hourly Manager (Hrs) (Hrs) (Hrs) (Hrs) (Hrs) (Hrs) rate 1 Accounting and treasury , Assets , Claims! Distributions , Creditors committee , Employees Statutory and compliance , Strategy&Planning , Tax , VAT , Brought forward at 15 May2016 1, , Total 2, ,

15 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 work: What, if any, financial benefit the work provided to creditors OR whether it was required by Area of work Work undertaken Why the work was necessary statute. The ongoing costs have been incurred The Joint Liquidators maintain an Thisfulfils statutory obligations and has no direct Accounting and treasury dealing with the Joint Liquidators internal account to record the assets. cash accounting requirements. reabsations and associated costs of financial benefit for creditors the liquidation. There is an ongoing claim being This should assist with asset This will ensure that aflirther realisation is available to Assets pursued against a third party. realisations for the benefit of the contribute to the expenses of the liquidation, and the first liquidation, andfinal dividend to unsecured creditors.. As afirst andfinal dividend wilt be We need to ensure the claims This process will ensure the correct dividend payment is.... paid to unsecured creditors, my Claims claims sub mitted by creditors are correct paid to agreed unsecured creditors. / Distributions team have therefore been agreeing and supported by sufficient creditor claims, information. A meeting of the committee was held The Joint Liquidators must report to Thisfutfils statutory obligations and has no direct during the period of this report. the committee to provide an update financial benefitfor creditors. Creditors committee on the progress of the case, to seek the committee s view on further action, and the approval offees.. The Joint Liquidators have maintained The Joint Liquidators must ensure This fulfils a statutory obligations and has no direct a constant review of compliance issues, that the liquidation process is financial benefitfor creditors. Statutory and compliance undertaken correctly and efficiently, and that all case issues are dealt with. The Joint Liquidators must ensure that The Joint Liquidators must ensure This will ensure that all available assets are realised to the liquidation issues are undertaken that the liquidation process is contribute to the expenses of the liquidation, and the first Strategy & Planning correctly and efficiently, and that all undertaken correctly and efficiently, andfinal dividend to unsecured creditors. compliance issues are dealt with. and that all compliance issues are dealt with. The Joint Liquidators have ensured This task was undertaken to ensure This fulfils a statutory obligations and has no direct Tax that reporting for Corporation Tax that this expense of the liquidation is financial benefitfor creditors. purposes is maintained, paid when itfalls due. 14. in

16 Whether or not the work will Ourfuture work VAT. The Joint Liquidators have ensured This task was undertaken to ensure. This will ensure that recoverable VAT is availabte to that reporting for VATpurposes is that allowable VAT incurred on the contribute to the expenses of the liquidation, and thefirst maintained, expenses of the liquidation are andfinat dividend to unsecured creditors. recovered. We still need to do the following work in the liquidation. provide a financial benefit to Area of work Work we need to do Estimated cost creditors Claims/Distribution & Creditors The agreement of unsecured 15,000 There will be afinancial benefit to claimsfor dividend creditors Assets To conclude the realisation of the 2,000 There should be afinanciat benefit remaining claim to creditors Creditors Committee To consider the remaining case 3,500 There is no directfinancial benefit issues and approve the Joint for creditors Liquidatorsfees Tax To agree the final Corporation Tax 500 There is no directfinancial benefit computation and confirm tax for creditors clearance Statutory and Compliance To undertake the closure process 4,000 There is no directfinancial benefit of the liquidation for creditors 15

17 at Disbursements don t need to services provided We get by facilities. These types the approves our case, subject to fees. a approval to draw expenses or disbursements unless they are for shared or allocated our own of firm, including room hire, document storage, photocopying, communication expenses are called Category 2 disbursements and they must be directly inctirred reasonable method of calculation and allocation and approved by the same party who on Our expenses policy the creditors committee where required. approved by allows for all properly incurred expenses to be recharged to the liquidation and has been The following disbursements arose Category 2 in the period of this report.. Policy Costs Photocopying copying. 2 Mileage 5 pence per sheet copied, only charged for circulars to creditors and other bulk incurred At a maximum of 71 pence per mile (up to 2,000cc) or 93 pence per mile (over 2,000cc) i Analyse all other disbursements reimbursed at cost Total Our relationships We have no business or personal relationships with the parties who the liquidation where the relationship could give rise to a Legal and other professionalfirms We ve instructed the following professionals on this case: approve our conflict of interest. fees or who provide services to Service provided Name of firm / Reason selected Basis of fees Legal services, specifically relating organisation to McGuire Woods the remaining claim London LLP industry knowledge time costs 16

18 Appendix D: Other information Date of the Liquidators appointment: Liquidators names, addresses and Broadway Tyres (Wholesale) Limited Ian Oakley Smith and ZeIf Hussain; both of PwC LLP, 7 More London, Riverside, London, SEi 2RT Trading name: Registered number: Registered address: contact details: Central Square, 8th floor, 29 Wellington Street, Leeds, West Yorkshire, LS1 4DL Company s registered name: As above r6 May