Pearl Linguistics Limited (in Creditors Voluntary Liquidation)

Transcription

1 Joint liquidators progress report from 3 March 2017 to 2 March 2018 Pearl Linguistics Limited (in Creditors Voluntary Liquidation) 30 April 2018

2 Contents Abbreviations and definitions 2 Key messages 3 Overview of what we ve done to date 5 Outcome for creditors 6 Progress since we last reported 7 Appendix A: Receipts and payments 10 Appendix B: Other information 11 Appendix C: Remuneration report Information to Creditors including revised Fees Estimate Background Our fees estimate Expenses Professionals and subcontractors Notes and assumptions 20 Pearl Linguistics 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 Liquidators firm Meaning Pearl Linguistics Limited in creditors voluntary liquidation Zelf Hussain and Matthew Boyd Callaghan of 7 More London Riverside, London, SE1 2RT PricewaterhouseCoopers LLP IR16 Insolvency (England and Wales) Rules 2016 IA86 Insolvency Act 1986 SOA CVL HMRC HSBCIF HSBC Cerberus prescribed part secured creditors preferential creditors RPS unsecured creditors Statement of Affairs Creditors voluntary liquidation HM Revenue & Customs HSBC Invoice Finance (UK) Limited HSBC Bank Plc Cerberus Receivables Management Limited 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 Generally, 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 Business, Energy and Industrial Strategy, which authorises 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 Key messages Why we ve sent you this report I m writing to update you on the progress of the liquidation of the Company in the first 12 months since the appointment of the Liquidators on 3 March We also provide an updated remuneration report which provides information to creditors on the work we have undertaken and the level of our fees. We will shortly be formally asking the Liquidation Committee to approve the basis of our fees. 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 ) Estimated timing Secured creditors 100p Paid Preferential creditors 100p June 2018 Unsecured creditors 5-10p September 2018 *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. What you need to do We plan to pay first and final dividends to the preferential and unsecured creditors over the next six months. We are therefore in the process of agreeing and admitting creditor claims to rank for dividend. Depending on the level of nature of your claim, what you need to do is different. Employees We will be writing to employees with details of your claims. If you dispute the claim you will need to contact us specifying what you are claiming. Other creditors with claims less that 1,000 Following a change in the Insolvency Rules last year, we are no longer requiring creditors with claims less that 1,000 to submit written claims (proof of debt) to us. All creditors with claims of less than 1,000 as shown on the directors Statement of Affairs will automatically be admitted at the amount shown in the Statement of Affairs. You should therefore check the balance attributed to you in the Statement of Affairs, a copy of which is available at If you are not correctly listed in the Statement of Affairs, you will need to submit a proof of debt in the same way as creditors owed more that 1,000. Creditors with claims of less than 1,000 which have already submitted a claim in writing will have their claim assessed based on their written claim. Creditors with claims of more that 1,000 or who wish to claim and amount less than 1,000 different to that listed in the Statement of Affairs All creditors who are owed more that 1,000 must submit their claim in writing (a proof of debt) in order to participate in a dividend to creditors. A proof of debt form can be downloaded from If you have not already done so, please now send us your proof of debt. 3

5 Please note that should you wish to vote in relation to any decision procedure during the liquidation or object to a decision sought by deemed consent, you ll need to submit a proof of debt, even if one is not required for dividend purposes. We will write to all creditors confirming the amount that their claim has been admitted for prior to paying a dividend. We will also write to all creditors who we think may have a claim of more than 1,000 but who has not submitted a claim. This notice of intended dividend will set a final date for proving by which written claims must be received in order to be taken into account for the dividend. Please advise us of any changes to name or address to ensure the notice of intended is received by all creditors. Notice of general use of website We have sent all creditors a notice of the general use of website. This document allows the Liquidators to deliver certain documents to creditors via the website without notifying the creditors that a document will be made available to them, therefore saving on the costs of doing so. However, we will send you the notice of our intended dividend and any further correspondence regarding the first and final unsecured distribution as we are required to do so. 4

6 Overview of what we ve done to date This is our first progress report to members and creditors. We summarise below the Company s background and reasons for its insolvency: The Company was incorporated in January 2004 to provide language services to the National Health Service and other UK public sector bodies: In October 2015 the Company entered into an invoice finance facility with HSBCIF. The Company grew steadily, reaching turnover of 6.3m by the year ending March 2016: In the period leading up to its insolvency, the business trading environment became increasingly competitive due to public sector budget cuts and pressure from customers to lower prices, reducing profit margins. The directors believe that failures in the management of the Company s finance team led to delays in them becoming aware of the Company s true financial position and its accruing arrears with HMRC. The directors attempted to agree an informal repayment agreement with HMRC but were unsuccessful. As a result, HSBCIF informed the directors that they could no longer support the business financially. The directors then took the view that the business was insolvent and should cease trading. The Company s members signed resolutions to liquidate the Company on 3 March A physical creditors meeting was held 17 March 2017 which ratified the appointment of Zelf Hussain and Matthew Callaghan of PwC as joint liquidators. After an initial review, we decided the most appropriate strategy was to ensure HSBCIF had the relevant information and support for it to collect the book debt ledger assigned to it, investigate possible claims the company may have and realise the Company s assets. Immediately on our appointment, we secured and took control of the Company s assets, which included: Fixtures, fittings and computers, with a book value c 60k Computer software and intellectual property, with a book value c 58k Potential surplus book debt ledger, with an unknown value. We have then followed this strategy, resulting in funds which are available to pay dividends to the preferential and unsecured creditors. We remain in office in order to distribute surplus funds to the preferential and unsecured creditors and finalise our duties as Liquidators. 5

7 Outcome for creditors Secured creditors HSBC s lending to the Company at the date of liquidation was in the region of 60k and was secured by two debentures dated 16 October 2013 and 24 January This security gave HSBC a fixed charge over book debts and a floating charge over all other assets of the Company. HSBC s debt was also cross guaranteed by HSBCIF. HSBCIF s lending to the Company as at the date of liquidation was in the region of 1,067k and was secured by a debenture dated 19 February This security gave HSBCIF a fixed charge over book debts and a floating charge over all other assets of the Company. In addition, almost all book debts were assigned to HSBCIF under the terms of the invoice discounting facility. This means that at the date of Liquidation, HSBCIF was the legal and beneficiary owner of these debts. Both HSBC and HSBCIF have been paid in full during the liquidation from book debt collections. Preferential creditors (mainly employees) In their SOA, the directors thought that preferential claims would total around 9k. Based on current information, we think that the level of preferential claims will be 14k. We think we ll be able to pay the preferential creditors in full based on what we know currently. This dividend is expected to be paid within 3 months of the date of this report. Unsecured creditors Dividends become available for unsecured creditors when there are sufficient funds (after costs of the liquidation) to pay the secured and preferential creditors in full, with an amount left over. In certain circumstances, part of the amount available for secured creditors may be ring-fenced 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 - or setting aside enough to pay - preferential creditors in full. But it only has to be made available where the floating charge was created on or after 15 September In this case the floating charge holders recovered their indebtedness from the assigned book debts. Therefore, there is no residual claim under the floating charge, and all funds (after meeting costs and paying preferential creditors) are therefore available to unsecured creditors. We think a dividend of about 5-10 % will be paid to the unsecured creditors based on what we know currently. We ve calculated this on the estimate of the unsecured creditors included in the SOA. This estimate depends on future realisations, liquidation costs and finalising claims from unsecured creditors and is only an indication. You shouldn t use it as the main basis for any bad debt provisions. 6

8 Progress since we last reported Realisation of assets assets specifically pledged to a creditor Book debts At the appointment date, the Company s book debt ledger which was assigned to HSBCIF had a book value of 2,172k, with 1,067k secured against it. Due to financial irregularities identified in the lead up to the liquidation, the directors considered that a substantial amount of the debts would be disputed and uncollectable. Therefore, they did not believe that there would be surplus funds available for the liquidation estate from this ledger. However, HSBCIF have been able to repay their secured indebtedness in full via book debt collections and have reassigned a surplus book debt ledger to the Company, which we have then continued to collect (see below). Cash at bank As illustrated in the directors SOA, the Company held c 25k in cash at the appointment date. This was used by HSBC to set off its secured indebtedness of c 60k, with the balance being repaid from surplus book debt collections by HSBCIF per its contractual right to mutual set off. HSBC has now been recovered its secured indebtedness in full. Realisation of assets assets not specifically pledged Re-assigned book debts In July 2017, HSBCIF re-assigned the residual book debt ledger to the Company. This followed successful recovery of book debts sufficient to repay its secured indebtedness in full, in addition to HSBC s secured indebtedness under their contractual rights to set off as noted above. The assigned book debt ledger had a gross value of c 1,108k, whilst surplus collections of c 121k were also remitted to the liquidation estate. On further review, the liquidators revised the value of the re-assigned ledger to 632k after adjusting for a number of duplications, errors and misstatements. The liquidators engaged Cerberus to collect out the residual book debt ledger in order to benefit from their specialised collections experience and minimise costs for the liquidation. During the Reporting Period, Cerberus recovered further book debts of 352k. Recovery of the re-assigned book debt ledger has now largely been completed with minimal future realisations are expected. Fixtures, fittings and computer equipment On appointment, we were able to realise a total of 2k in respect of computer equipment and office fixtures and fittings. We do not expect any further realisiations. Computer software During the Reporting Period we prepared a marketing pack for the Company s software and various pieces of intellectual property. This marketing pack was circulated to a number of interested parties but only one offer was received with a value which was deemed too low to generate a benefit to the liquidation estate. We do not expect generate any further realisations from this source. 7

9 Directors loan account The directors SOA stated that there was an overdrawn loan account with 5k owing to the Company. After further investigation, we have determined that the directors loan accounts were in a credit position, with no funds due to the Company in liquidation. Sundry assets and refunds During the Reporting Period we recovered business rates and insurance refunds totalling c 2k. No further recoveries are expected from this source. Other issues Employee protective award claims Shortly after our appointment as liquidators we were notified that a number of former employees had commenced a claim against the Company in connection with its failure to give proper consultation prior to making redundancies. These claims were successful, with employees being awarded 90 days pay as compensation. These claims are estimated to total c 144k, with a small amount ranking as preferential and the balance ranking as unsecured claims. We not expect any further claims to be made. Liquidation committee On 17 March 2017, creditors decided to form a liquidation committee consisting of the following members: Dharmehdra S. Modi Colomba Astaburuaga Sally Chalk of Clarion Interpreting Limited Ines Houidi of Premium Linguistics Services Mamta Pabari We re speaking with the Liquidation Committee to discuss issues and outline key decisions. We have held four meeting of the Committee since liquidation. We last met with the Liquidation Committee on 3 April We would like to thank member of the Committee for the time they have committed to this and for their assistance in the Liquidation. As discussed in the Remuneration Report, we will shortly be seeking agreement to the basis of our fees from the Committee. Statutory and compliance We have complied with our statutory requirements as Liquidators in terms of reporting to both the creditors and HMRC. We will continue to do this until closure of the liquidation. Investigations and actions We have reviewed the Company s affairs and taken into account any points raised by creditors in discharging our duties under the Company Directors Disqualification Act 1986 and Statement of Insolvency Practice No.2 ( SIP2 ). The Liquidators, with the assistance of the Liquidation Committee, have identified a number of matters in relation to the conduct of the directors and officers which have required us to undertake further investigations. This work has identified a number of potential claims the Company may have against third parties and legal advice has been sought on the merits of litigation action. We retain all options in relation to any potential action and will continue to consult with the Liquidation Committee on the merits of pursuing any particular claim. Our receipts and payments account We set out in Appendix A an account of our receipts and payments in the liquidation from 3 March 2017 to 2 March

10 Our expenses We set out in Appendix C a statement of the expenses we ve incurred to the date covered by this report and an estimate of our future expenses. Our fees We set out in Appendix C an updated Remuneration Report, which provides information on our fees, disbursements and other related matters. We are asking the Liquidation Committee to agree the basis of our remuneration as the fee approving body. We also detail why our remuneration will exceed the initial fee estimate provided on 15 March 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 our fees and expenses within eight weeks of receiving this report as set out in Rule IR16. This information can also be found in the guide to fees at: You can also get a copy free of charge by telephoning Madeline Finkill on What we still need to do We still need to agree and pay the claims of both the preferential and unsecured creditors. We will then be in a position to complete our duties and cease to act as Liquidators. 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 Madeline Finkill on Yours faithfully Zelf Hussain Joint Liquidator Zelf Hussain and Matthew Boyd Callaghan have been appointed as joint liquidators of Pearl Linguistics Limited. Both are licensed in the United Kingdom to act as an Insolvency Practitioner by the Institute of Chartered Accountants in England and Wales. The joint liquidators are bound by the Insolvency Code of Ethics which can be found at: The joint liquidators 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 liquidation. 9

11 Appendix A: Receipts and payments Reciepts and Payments account for the period 3 March 2017 to 2 March 2018 Statement of Affairs From 3 March 2017 to 2 March 2018 Receipts - Book debts 473, Fix tures, fittings and computers 2, Rates refunds 2, Sundry refunds 2, ,000 Directors' loan account - 5,000 T otal receipts 480, Pay m ents Insurance Adv ertising costs Storage 1, Bank charges Legal fees 4, Debt collection fees 19, T otal pay m ents 26, VAT control account - 5, Cash at Bank* 448, *these funds are held in an interest bearing account 10

12 Appendix B: Other information Company s registered name: Trading name: Pearl Linguistics Limited Pearl Linguistics Registered number: Registered address: Date of the Liquidators appointment: 3 March 2017 Liquidators names, addresses and contact details: Central Square, 29 Wellington Street, Leeds, LS1 4DL Zelf Hussain and Matthew Callaghan of PricewaterhouseCoopers LLP, 7 More London, Riverside, London, SE1 2RT Contact telephone number:

13 Appendix C: Remuneration report Information to Creditors including revised Fees Estimate 1. Background 1.1. Purpose of this advice to creditors If a company or individual is facing financial difficulty they may enter a formal insolvency process under the control of an independent external person (an insolvency practitioner). The costs of the proceedings are paid out of the assets of the company or the individual s estate and include the insolvency practitioner s remuneration, which in this case would be our fees for acting as joint liquidators. We must seek approval to the basis of our remuneration before it is paid and provide the fee approving body with sufficient information for them to make a decision. Insolvency law determines who the fee approving body is (and it depends on the circumstances of the case), but it s usually those creditors who have a direct interest in the amount paid because it impacts on how much those creditors recover. Changes to insolvency legislation on 1 October 2015 also now require us to give all known creditors details of the work we expect to carry out during the case and the expenses that are likely to be incurred. Also, if our fees are proposed to include remuneration calculated on a time costs basis, we must provide an estimate of those fees. This report provides all this information and details of where further information can be obtained. We originally circulated a Remuneration Report to Creditors dated 15 March That report made certain assumptions including that there would be no return to creditors and no investigation work undertaken. We are pleased to report that the predicted outcome for creditors is materially better than that assumption, with significant work undertaken on book debt realisations, investigations and future work on distributions to preferential and unsecured creditors. As a result our costs are higher and a revised report is needed Action required by you The basis of our fees will be approved by the Liquidation Committee and therefore no further action is required by the general body of creditors. Creditors rights You can find information on liquidator s fees and your rights at: How fees are calculated Insolvency law currently allows fees to be calculated in three ways: As a percentage of the value of the property which we realise and/or distribute (often referred to as a percentage basis ); By reference to the time properly given by us and our staff attending to the matters arising ( time costs basis ); or A set amount (a fixed fee). 12

14 The basis of our fees can be a combination of the above and different bases can be used for different parts of our work. The fee approving body decides which basis (or combination of bases) should be used to calculate fees, once it is satisfied that the fee basis proposed represents the most appropriate mechanism in the circumstances of the case. In this case we are proposing that our remuneration is on a fixed fee basis at 150,000 (plus VAT). In the next section we include details of the work we have or are to likely undertake. We believe this basis and amount produces a fair and reasonable reflection of the work done and anticipated to be undertaken, for the following reasons: Extraction of evidence and information from the Company s systems and a systemic approach using an experienced agent has allowed us to collect significantly more than was originally anticipated from the book debt ledger. As a result, the secured and preferential creditors will be paid in full, with a partial distribution to the unsecured creditors. Considerable work has been undertaken on investigating the actions of the Company s officers and any claims that may arise. These have been considered thoroughly with legal advice and the Liquidation Committee. The Company has over 2,400 creditors with whom we have needed to communicate. Many of these are individuals with no previous experience of an insolvency process. This has meant we have received numerous queries by telephone, letter or which have required a response. We have consulted with an active Liquidation Committee who have represented creditors interests. Four meetings have been held, with various correspondence and phone calls with members between meetings. This fee basis has been negotiated and agreed by the Liquidation Committee in principle. It represents a discount on our time costs for time anticipated to be spent on the liquidation. The fixed fee is based on the assumptions which are set out in Section 5 of this appendix. If we agree with the Liquidation Committee that we should undertake further work, we will agree with the Committee at that time the fees which will apply to such additional work. 13

15 2. Our fees estimate 2.1. Work we have done or propose to undertake In Section 1 of this appendix, we explained how the nature of the liquidation has changed significantly since our first remuneration report was issued in 15 March 2017 and summarised some of our key work and achievements. Further information on this is set out in the main body of the progress report. The following table provides a more detailed summary of the work we have done or propose to do (indicated by), have already done () or which is in progress (). It provides a brief summary for each category rather than an exhaustive list of all possible tasks. Table 1 Work we have done or propose to undertake - 150,000 Category of work General description Work included Book debt realisations Asset recoveries Instructing agents to realise the debts Liaising with HSBC IF regarding the remaining book debt ledger following their recovery Liaising with Cerberus regarding progress and future recoveries Suppling Cerberus with information to aid their recoveries Other assets Property Securing possession of property Liaising with the landlord regarding our appointment Correspondence requesting an informal surrender Disclaiming the Company s interest in the lease. Other chattel assets Liaising with interested parties and arranging for site visits Reviewing asset listings Sale of assets and dealing with realisations Insurance Corresponding with insurer regarding initial and ongoing insurance requirements Realising any value within policies Other sundry assets Detailing particulars of the software and intellectual property and sealing offers Reviewing possible refunds and obtaining a rates refund Third party assets Reviewing leasing documents Liaising with owners/lessors Arranging for the return of assets to their owners Creditors Creditor enquiries Setting up a dedicated website and mailbox for delivery of initial and ongoing communications and reports Receiving and following up creditor enquiries via telephone, and post Reviewing and preparing correspondence to creditors and their representatives Secured creditors Notifying secured creditors of appointment Responding to secured creditor s queries Preferential claims Corresponding with employees regarding dividend Preparing, issuing and receiving employee preferential claim agreement forms Corresponding with the RPS regarding proof of debt 14

16 Category of work General description Work included Calculating dividend rate and preparing dividend file Advertising dividend notice Preparing and paying distribution Ensuring PAYE/NIC is deducted and remitted to HMRC Unsecured claims Dealing with proofs of debt for dividend purposes Preparing correspondence to potential creditors inviting lodgment 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 Employees and pensions Communications with employees Drafting, issuing and delivering initial communications and announcements Preparing letters to employees advising of their entitlements and options available Receiving and following up employee enquiries via telephone, post and Redundancy related Selecting and making redundancies work Liaising with the RPS and external agencies Dealing with Employment Tribunal and protective award claims Pensions Issuing statutory notices Investigations Conducting investigations Collecting company books and records and obtaining a forensic copy of the Company s electronic systems Reviewing books and records Preparing comparative financial statements and deficiency statement Reviewing specific transactions and liaising with directors regarding certain transactions Preparing investigation file and lodging findings with the Department for Business, Innovation and Skills Book debt realisations Asset recoveries Reviewing information from the systems and as provided by the directors to identify potential recovery actions Discussing potential recovery actions with the Liquidation Committee Instructing and liaising with solicitors regarding recovery actions Holding internal meetings to discuss the strategy of asset realisations Asset recoveries Instructing agents to realise the debts Liaising with HSBC IF regarding the remaining book debt ledger following their recovery Liaising with Cerberus regarding progress and future recoveries Suppling Cerberus with information to aid their recoveries Statutory and compliance Initial letters and notifications Preparing and issuing all necessary initial letters and notices regarding the administration and our appointment 15

17 Category of work General description Work included Remuneration reports Preparing and circulating to creditors an initial report and this second report giving details of the work we expect to carry out during the case, our fees estimate and the expenses that are likely to be incurred. Case reviews Conducting case reviews after the first month, then every six months Initial meeting of creditors Progress reports and extensions Preparing meeting notices, proxies and advertisements Preparing meeting file, including agenda, attendance register and copy documents Making arrangements for the meeting and attending it Preparing minutes of meeting and issuing a report on the outcome to creditors Preparing and issuing periodic progress reports to creditors and the Registrar Books and records Collecting company books and records where not related to investigatory work Dealing with records in storage Sending job files to storage Liquidation Committee Election of Committee, filing certificates of constitution and obtaining nondisclosure agreements from Committee members Holding Committee meetings and reporting to the Committee Ad hoc queries and correspondence with Committee members Other statutory and compliance Review of the Liquidators work and agreement of the fees and category 2 disbursements Filing of documents Updating checklists and diary management system Tax & VAT Tax Gathering information for the initial tax review Carrying out tax review and subsequent enquiries Preparing tax computations Liaising with HMRC Accounting and Treasury Strategy & Planning VAT Gathering information for the initial VAT review Receipts and payments management Carrying out VAT review and subsequent enquiries Deregistering for VAT purposes Submitting a VAT 426 for recoverable VAT Liaising with HMRC Opening and closing bank account and arranging facilities Dealing with receipts, payments and journals not relating to trading Carrying out bank reconciliations and managing investment of funds Corresponding with bank regarding specific transfers Strategy and planning Completing tasks relating to job acceptance Preparing fee budgets & monitoring cost Holding team meetings and discussions regarding status of liquidation Closure procedures Withdrawing undertakings not relating to trading and obtaining clearances from third parties Completing checklists and diary management system Closing down internal systems Included in the above table are tasks that we must perform that may not directly benefit creditors financially. These typically relate to fulfilling obligations imposed by statute or regulatory bodies. 16

18 3. Expenses 3.1. What is an expense? Expenses are defined in SIP9 as amounts properly payable by the office holder from the estate which are not office holders remuneration or a distribution to creditors. Expenses include disbursements, which are expenses met by and reimbursed to an office holder in connection with an insolvency appointment. They fall into two categories: Category 1 and Category 2: Disbursement Category 1 Category 2 SIP9 definition Payments to independent third parties where there is specific expenditure directly referable to the appointment in question. Costs that are directly referable to the appointment in question but not to a payment to an independent third party. They may include shared or allocated costs that may be incurred by the office holder or their firm, and that can be allocated to the appointment on a proper and reasonable basis. Our firm s disbursements policy allows for all properly incurred expenses to be recharged to the case. We don t need approval from creditors to draw Category 1 disbursements as these have all been provided by third parties, but we do need approval to draw Category 2 disbursements as these are for services provided by our firm. The body of creditors who approve our fees also have responsibility for agreeing the policies for the payment of Category 2 disbursements, which in this case are as follows: Photocopying At 5 pence (black & white) or 10p (coloured) per sheet copied, only charged for circulars to creditors and other bulk Mileage At a maximum of 70 pence per mile (up to 2,000cc) or 91 pence per mile (over 2,000cc). Table 2 Disbursements Category Policy Costs incurred 2 Photocopying - at 5 pence per sheet copied, only charged for circulars to creditors and other bulk copying Mileage - At a maximum of 70 pence per mile (up to 2,000cc) or 91 pence per mile (over 2,000cc) Storage costs Postage 5, Other insurance costs Advertising costs Land registry searches Travel expenses Total 7,

19 3.2. Our expenses estimate The following table shows expenses incurred to date and an estimate of further expenses we consider will be (or are likely to be) incurred. The total expenses estimate for the case is 41,758. The estimate excludes any potential tax liabilities that may be payable as an expense of the administration in due course because amounts due will depend on the position at the end of the tax accounting period. The table below shows the expenses of the Liquidation (excluding Liquidations fees and tax) compared with our initial estimated in the Remuneration Report dated 15 March Although the estimate has increased significantly, the majority of the increase related to debt collection fees which are directly related to the success in collecting the Company s debts. Table 3 Expenses estimate In cu rred bet ween 3 Ma rch 2017 t o 2 Ma rch 2018 Est im a t ed fu t u re t o in cu r A n t icipa t ed t ot a l In it ia l est im a t e V ariance Liqu idat ion expenses In su r a n ce A dv er tisin g costs Stor a g e 1, , , , Ba n k ch a r g es Leg a l fees 4, , , , Debt collection fees 1 9, , , Posta g e 5, , , , Liqu ida tor 's disbu r sem en ts 2, , , T ot a l 33, , , , ,

20 4. Professionals and subcontractors Table 4 Professionals and subcontractors Service provided Name of firm Reason selected Basis of fees Legal advice, including: Advising regarding the potential investigations against the former officers Disclaiming the lease Burlingtons Legal LLP Insolvency expertise Time costs Book debt collection Liaising debtors to recover book debt amounts Reviewing disputed invoices Cerberus Receivable Management Limited Industry knowledge Percentage of realisations We require all third party professionals to submit time costs analyses and narrative or a schedule of realisations achieved in support of invoices rendered. 19

21 5. Notes and assumptions 5.1. Fees estimate We have assumed the liquidation will last no more than two years and that there will be only one distribution to the unsecured creditors. We have assumed that there will be no further detailed investigations required, litigation commenced or claims progressed against third parties. If such claims are made, these will be the subject of additional fee agreement with the Committee Expenses Our expenses table includes our fixed fee amount Associates The Liquidators have no business or personal relationships with parties responsible for approving remuneration or who provide services to the liquidators in respect of the appointment where the relationship could give rise to a conflict of interest. 20