Administrator s progress report

Transcription

1 Rule 2.47 Form 2.24B The Insolvency Act 1986 Administrator s progress report Name of Company Casco Limited Company Number In the High Court of Justice, Chancery Division, Companies Court Court case number 5027 of 2016 (full name of court) (a) Insert full name(s) and address(es) of administrator(s) We, Matthew Boyd Callaghan and David Christian Chubb of 7 More London Riverside, London, SE1 2RT administrators of the above company attach a progress report for the period from to (a) 19 August 2016 (b) 18 February 2017 Signed Joint Administrator Dated 17 March 2017

2 Joint administrators progress report from 19 August 2016 to 18 February 2017 Casco Limited (in administration) 17 March 2017 High Court of Justice, Chancery Division, Companies Court Case no of 2016 PricewaterhouseCoopers LLP Central Square 29 Wellington Street Leeds LS1 4DL

3 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 x Appendix B: Other information xii Appendix C: Pre administration Costs xiii Appendix D: Remuneration Report xv Casco Limited in administration PwC Contents

4 Abbreviations and definitions The following table shows the abbreviations and insolvency terms that may be used during this report: Abbreviation or definition Company Administrators / we Meaning Casco Limited Matthew Boyd Callaghan and David Christian Chubb firm PricewaterhouseCoopers LLP IR86 Insolvency Rules 1986 IA86 Insolvency Act 1986 Sch.B1 IA86 Schedule B1 to the Insolvency Act 1986 HMRC the Bank LXAA LX Aero Hilco IBA AMP DBEIS JPA NDA SOA prescribed part HM Revenue & Customs Svenska Handelsbanken SA (Publ) LXA Aviation Assets Limited Logix Aero Limited Hilco Valuation Services International Bureau of Aviation Airline MRO Parts (AMP) Inc Department of Business, Energy and Industrial Strategy JP Associates Limited Non-Disclosure Agreement Statement of Affairs 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 secured creditors Creditors with security in respect of their debt, in accordance with section 248 IA86 preferential creditors Claims for unpaid wages earned in the four months before the insolvency up to 800, holiday pay and unpaid pension contributions in certain circumstances unsecured creditors Creditors who are neither secured nor preferential ii

5 Key messages Why we ve sent you this report I m writing to update you on the progress of the administration of the Company in the first six months since our appointment. This report contains all the information we are required to provide to you under IR86. You can still view our previous report (including Proposals) on our website at How much creditors may receive The following table summarises the possible outcome for creditors*, based on what we currently know. Class of creditor Current estimate (p in ) Previous estimate (p in ) Secured creditors 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, whilst we think preferential creditors (if any) with estimated claims of 1,600 will be repaid in full. We think the Company s unsecured creditors will total between 3.9m and 7.7m: and estimate that they will get a maximum dividend of 1.5 p in the from the prescribed part fund based on what we know currently. The amount of any dividend and when it would be paid are dependent on future asset realisations and cost of the administration. What you need to do If you haven t already done so, please send your claim to us at this office. A claim form can be downloaded from our website at or you can get one by telephoning Chris Sykes on iii

6 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. Corporation tax receivable. Book debts. We remain in office to realise the Company s joint venture stocks, plant and equipment, motor vehicles, book debts and terminal loss relief claim. We are also exploring a number of pre-administration transactions to determine if a legal challenge could generate further realisations for creditors. Other outstanding matters include agreeing and paying preferential claims and seeking approval for the basis of our fees from the secured and preferential creditors. Once these matters have been concluded, 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

7 Progress since we last reported Consignment agreement and bulk 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 with less onerous terms. 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 In tandem with this agreement we commenced a marketing process for the sale or consignment of the Company s stock. This was undertaken in three parts: 1) Initial interest: In the first two weeks we were contacted by 10 interested parties from whom we obtained NDAs and then sent key financial information; 2) Targeted marketing: We worked with the directors and identified a list of 24 potential interested parties whom we contacted; and 3) Trade circular: In order to generate interest from key industry operators, we prepared and sent out an advertisement in a trade circular. The advertisement was circulated on 28 September 2016 to a total of 30,000 contacts from whom we received 195 responses, with 96 interested parties returning signed NDA s before the given deadline of 3 October After initial discussions with interested parties we extended the deadline for offers until 7 October 2016 in order to allow us to deal with all the interested parties. We received in excess of 33 formal offers for the stock on either a bulk purchase or consignment basis. Following analysis of the various offers we held discussions with Hilco and IBA who provided independent valuation advice. We also discussed the offers with the Bank and major unsecured creditors and concluded that a bulk stock sale option would generate the best return for creditors. We selected the two parties with the best deliverable offers and issued contracts to both parties in order to maintain competitive tension and protect the value in the sale. Following extended negotiations we completed a sale of the Company s wholly owned inventory on 11 January 2017 for $903,000 to AMP which is registered in Panama and with operations run from the USA. The sale proceeds have been received in full and illustrated at Appendix A. We have spent a significant amount of time planning and implementing our strategy for realising the Company s unencumbered stock as well as negotiating with interest parties and finalising an agreement with AMP. This strategy has enabled us to achieve realisations far in excess of the stocks value in an accelerated sale scenario and ultimately maximise returns for the general body of creditors. Upon exchanging contracts with AMP we terminated our consignment agreement with LX Aero. The short term consignment agreement generated gross realisations of c$160,000 before allowing for commissions and costs. These incremental sales generated cash which allowed us to finance the ongoing holding costs whilst we undertook the full bulk sale process. The Company still holds certain stock which it owns in joint names with third parties. We are in the process of realising our interest in this stock and will provide an update in our next report. v

8 Chattel assets The Company owns various pieces of plant, equipment, motor vehicles, fixtures and fittings. According to the directors SOA, the Company s chattel assets have a book value of 66,930 and are estimated to realise 29,952. We instructed European Valuations to provide guidance and sales assistance on the realisation of chattel assets. During the Reporting Period we realised 8,500 from this source. We have also 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 have not yet been remitted. The Company s residual chattels assets will be sold following our exit from the Company s trading premises. 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. 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 realised 14,555 of gross book debts and remitted funds to the administration estate (after deducting their commission of 1,455 plus VAT). A small number of high value book debts have been pursued by our staff and we have realised 26,013, $103,598 and 1,171 to date. We are now considering commencing litigation against a number of these debtors with unpaid balances. We continue in our efforts to realise unpaid book debts with the assistance of JPA, however further recoveries are expected to be limited. We will provide a further update in our next progress report. Cash at bank At the date of appointment, the Company held $55,344 and 1,199 in its pre-administration accounts, all held with the Bank. These funds have been set-off by the Bank against its outstanding indebtedness and therefore not reflected in the Receipts and Payments Account at Appendix A. Terminal loss relief We have carried out a review of the Company s financial records and believe that there may be a potential terminal loss relief claim owed in relation to corporation tax paid over the last three years of trading. 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. Investments in subsidiaries The Company held investments in one Singapore based subsidiary, Casco Aero PTE. Ltd, however we have determined that this company has limited net assets and no realisable value for the administration estate. Litigation We continue to assess the merits of claims the Company may have against third parties and may commence litigation for the benefit of creditors. Other assets & sundry refunds The Company owns a number of private vehicle registration plates and we are taking steps to realise these assets for the benefit of the administration estate. A further update will provided in our next progress report. We are not aware of any other assets or refunds available to the Company. vi

9 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 not been remitted to the administration estate. We are aware of a number of connected party transactions which occurred prior to our appointment and details can be found in our Proposals. Stock held as consignee At the date of appointment the Company held stock on consignment from 18 different third parties made up of circa 50,000 lines of stock. Following our appointment we decided not to market consignment stocks for sale. A number of the consignment agreements contained termination clauses and so we quickly began the process of repatriating the assets to the relevant third parties. We have made extensive efforts to identify and contact the consignors, assisting with the return of their assets as far as reasonably possible. This work has mitigated the level of unsecured claims in the administration whilst also enabling us to identify and separate out the Company s own unencumbered stocks. By separating the Company s own stocks from that owned by third parties we were able to successfully market and maximise the value from these assets in the bulk stock sale transaction to AMP. There remains a small number of consignors who have not yet retrieved their assets. We will continue to facilitate this in a cost effective manner. In addition, we have identified situations where the Company had invested funds in repairing and certifying this consignment stock in anticipation of future sales and we have sought to recover these costs where possible. We have realised a total of $61,915 through successfully recharging these costs. Approval of our Proposals On 14 October 2016, we sent to creditors our Proposals for achieving the purpose of administration. We said in our Proposals that we thought the Company does not have enough assets to pay a dividend to unsecured creditors other than from the prescribed part. This meant that we did not have to hold a creditors meeting to approve our Proposals and our Proposals would be treated as approved if creditors did not request a meeting in the required manner. As creditors did not request a meeting, our Proposals were treated as approved on 31 October Investigations and actions Under insolvency legislation we have an obligation to review the conduct of everyone who has acted as a director of the Company within the three years prior to our appointment and file a confidential report with the Department for Business, Energy and Industrial Strategy ( DBEIS ). We can confirm that we have complied with the requirements to report to the DBEIS, however, as is standard practice, for confidentiality reasons we are unable to give any further information. As part of our duty to investigate what assets there are in the Company, we consider any potential claims against third parties and what recoveries can be made. A number of potential claims have been identified and we are exploring the strength of these claims and the potential benefit to creditors of commencing litigation. vii

10 Our receipts and payments account We set out in Appendix A an account of our receipts and payments for the Reporting Period. In our Proposals we included a trading profit and loss account within our receipts and payments account. We have now determined that as the Company had no employees on appointment and we have not purchased stocks or marketed third party consignment stocks for sale, we have not traded in administration. 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. 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 our remuneration report which covers our fees, disbursements and other related matters in this case. Pre-administration costs You can find in Appendix C 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 2.48A IR86. 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 IR86. This information can also be found in the guide to fees below: A creditors guide to administrators fees You can also get a copy free of charge by telephoning Chris Sykes 0n Next steps We expect to realise the Company s residual assets and deal with all outstanding administration matters before the anniversary of our appointment. Once completed we will distribute the prescribed part funds available (if any) to unsecured creditors and move the Company to dissolution. Should we require an extension of the term of our appointment we intend to seek consent from the secured and preferential creditors in the first instance. We expect to send our next report to creditors at the end of the administration or in about six months, whichever is the sooner. viii

11 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 Matthew Boyd Callaghan and David Christian Chubb 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 an Insolvency Practitioner 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. ix

12 Appendix A: Receipts and payments Sterling Account T otal for the period from 19 August 2016 to 18 February 2017 Estim ated Future Movements Estim ated outcome SOA Value Floating charge receipts Stock 5,000 Unknown 5, ,192 Plant & Machinery 6,000 Unknown 6,000 29,952 Fixtures & Fittings 2,500 Unknown 2,500 Debtors 40,568 Unknown 40, ,7 35 Terminal Loss Relief Claim - Unknown Unknown Sundry Floating Transfer from currency accounts 39, , ,461 Bank Interest Gross , , , ,87 9 Floating charge pay ments Direct Expenses 1, ,020 Sub Contractors 25,889 4,000 29,889 Heat & Light 1, ,500 11,7 7 5 Telephone 2,192-2,192 Repairs & Maintenance Sundry Expenses Duress Pay ments Rent - 45,000 45,000 Business Rates - 37,000 37,000 Insurance - 25,000 25,000 Administrators' Fees - Unknown Unknown Administrator's Disbursements - Unknown Unknown Agents Fees & Disbursements 4,497 21,500 25,997 Professional Fees 1,7 10-1,7 10 Debt Collection Fees 1,456 Unknown 1,456 Storage Costs 2,914 2,000 4,914 Statutory Advertising Bank Charges , , ,254 Net Floating Charge Assets 50, , ,656 VAT Control account (4,994) 4,994 (0) Balance at Bank 45, , ,655 Notes 1 The directors SOA gave an estimated realisable value for stocks in Sterling but the assets have been realised in US Dollars, with the currency being transferred to the Sterling account in due course. x

13 US Dollar Account T otal for the period from 19 August 2016 to 18 February 2017 Floating charge receipts Stock 964, ,020 Estim ated Future Movem ents Estim ated outcom e $ $ $ Recharged Stock Repairs 61,915 61,915 Debtors 103,598 Unknown 103,598 Sundry Debts & Refunds ,130,283-1,130,283 Floating charge paym ents Direct Expenses 18, ,87 1 Legal Fees & Disbursments 86, ,300 99,069 Bank Charges Transfer to Sterling Account - 1,012,181 1,012, ,752 1,024, ,102 Net Floating Charge Assets 1,024,531 (1,024,531) 0 VAT Control account (14,522) 1 4,522 - Balance at Bank 1,010,009 (1,010,009) - Euro Account T otal for the period from 19 August 2016 to 18 February 2017 Floating charge receipts Debtors 1,17 1 Uncertain 1,17 1 Estim ated Future Movem ents Estim ated outcom e 1,17 1-1,171 Floating charge paym ents Bank Charges Transfer to Sterling Account - 1,157 1, ,157 1,171 Net Floating Charge Assets 1,157 (1,157) - VAT Control account Balance at Bank 1,157 (1,157) - xi

14 Appendix B: 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: Central Square, 29 Wellington Street, Leeds, LS1 4DL Date of the joint administrators appointment: Joint administrators names and addresses: Appointor s name and address: Split of the joint administrators responsibilities: 19 August 2016 Matthew Boyd Callaghan and David Christian Chubb of PricewaterhouseCoopers, 7 More London Riverside, London, SE1 2RT Svenska Handelsbanken AB (Publ) 3 Peveril Court, 6-8 London Road, Crawley, West Sussex For the purposes of paragraph 100(2) Schedule.B1 of the Insolvency Act it is hereby confirmed that the joint administrators may act jointly and severally so that all their functions, powers and duties may be executed by any or all of them. xii

15 Appendix C: Pre administration Costs As reported in our Proposals, the following costs were incurred prior to the appointment of administrators but with a view to the Company entering administration. It is proposed that the unpaid costs will be paid as an expense of the administration. Such payment is subject to approval of the secured and preferential creditors under Rule 2.67 of the Insolvency Rules 1986 and not part of the proposals subject to approval under paragraph 53 Sch.B1 IA86. Such a request will be made to the relevant classes of creditors in due course in accordance with Rule IR86. Pre-adm inistration Costs Unpaid ( ) Paid ( ) Fees Charged by the Administrators 31,356 Nil Disbursements Incurred by the Administrators Nil Nil Expenses Incurred by the Administrators Tay lor Wessing LLP 1,803 Nil T otal 33,159 Nil Nb. A ll fees, disbu r sem en ts a n d ex pen ses w ill be su bject to V A T A summary of the pre-administration work undertaken by PwC and its legal advisors included the following: Consideration of key practical issues to be addressed on entering administration; Planning the administration strategy; Obtaining and discussing legal advice in relation to the appointments; Meetings with key members of staff and directors regarding the administration strategy; Reviewing draft appointment documents and associated paperwork; and Planning work in relation to the administration appointments, including internal compliance and risk procedures and all necessary steps to be able to provide the statutory conformation that the objectives of the administrations were reasonably likely to be achieved. PwC and TW s work in preparing and planning for the administrator s appointment made a significant contribution to achieving the purpose of the administrations as it facilitated the continuation of trade and meant we could quickly take control of the Companies suppliers by mobilising a fully briefed team. A breakdown of the Administrator s costs by grade has been summarised below: xiii

16 Grade Hours Charged T im ecosts Avg Hourly Rate Partner 3 1, Director 14 10, Senior Manager 8 3, Manager 35 11, Senior Associate 10 1, Associate 13 2, T otal 82 31, In addition to the costs noted above, we previously reported that pre-administration costs were incurred by Gately Plc in connection with the creditor s administration application put forward by LXAA. Gately Plc were engaged as legal advisors of the proposed administrators BDO LLP and have confirmed that their unpaid time costs incurred in connection with placing the Company into administration total 20,658. We have reviewed the status of these costs and have been made aware of a Court order on 24 August 2016 which ordered that Gatley s costs be paid as an expense of the administration. We therefore do not require further approval to pay these costs under Rule 2.67 of the Insolvency Rules We are taking steps to agree a settlement with Gately and will pay these costs in due course. xiv

17 Appendix D: Remuneration Report xv

18 Casco Limited - in administration Remuneration Report: Initial Information to Creditors 17 March 2017

19 Table of Contents 1. Abbreviations and definitions Background Purpose of this initial advice to creditors Action required by you How fees are calculated Our fee estimate Summary Work we propose to undertake Our time charging policy and hourly rates Further approval Expenses What is an expense? Our expenses estimate Notes and assumptions Work we propose to do Expenses Associates Analysis of time costs for the period from 19 August 2016 to 29 January

20 1. Abbreviations and definitions The following table shows the abbreviations and insolvency terms that may be used during this report: Abbreviation or definition the Company Casco Holdco Casco Property Holdco the Group Connected Companies the Administrators or we or our LXAA Firm or PwC the Bank Meaning Casco Limited Commercial Aerospace Aviation Holdco Limited Commercial Aerospace Services Co Limited the Company and Casco Holdco Casco Holdco, Casco Property Holdco and Commercial Aerospace Services Co Ltd Matthew Boyd Callaghan and David Christian Chubb LXA Aviation Assets Limited PricewaterhouseCoopers LLP Svenska Handelsbanken SA (Publ) IA86 Insolvency Act 1986 IR86 Insolvency Rules 1986 Preferential creditors Prescribed part RPS Secured creditors SIP Unsecured creditors Creditors with claims for: 1. unpaid wages for the whole or any part of the period of four months before 19 August 2016 (up to a maximum of 800); 2. accrued holiday pay for any period before 19 August 2016; and 3. unpaid pension contributions in certain circumstances. 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 Redundancy Payments Service (part of the Insolvency Service, an executive agency of the Department for Business, Energy and Industrial Strategy) Creditors with security in respect of their debt, in accordance with section 248 IA86 Statement of Insolvency Practice (issued by regulatory authorities, setting out principles and key compliance standards with which insolvency practitioners are required to comply) Creditors who are neither secured nor preferential Matthew Boyd Callaghan and David Christian Chubb have been appointed as joint administrators of the Company to manage the affairs, business and property as its agents and act 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. Casco Limited - in administration 16 March 2017 PwC 2

21 2. Background 2.1. Purpose of this initial advice to creditors If a company or individual is facing financial difficulty they may enter into 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 administrators. 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. Who is the fee approving body is governed by IR86 and depends on the circumstances of the case, but is 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. To further understand the detail of the work undertaken and proposed by the Administrators and the value achieved for the administration, this report should be read in conjunction with the Administrators proposals dated 14 October A copy of the proposals can be found at Action required by you The following table gives our current estimates on the likely return for the various classes of creditors. Table 1 dividend prospects Class of creditor Forecast return Timing Secured creditor 0-20p/ May 2017 November 2017 Preferential creditors 100p/ Before May 2017 Unsecured creditors 0 1.5p/ May 2017 November 2017 As stated in our proposals, we believe that there will be no funds to distribute to unsecured creditors of the Company, other than via the prescribed part. The directors submitted claims for arrears of wages and no further preferential claims are anticipated. As no creditors committee was formed, the secured and preferential creditors have the responsibility for fixing the basis of our fees and Category 2 disbursements. We will seek such fee approval separately in due course. This Remuneration Report is therefore for your information purposes only and no action is required in respect of our fees or expenses. Creditors rights You can find information on administrators fees and your rights at: ators_fees_oct_2015.ashx Casco Limited - in administration 16 March 2017 PwC 3

22 2.3. 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 deal with (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). 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 the case of the Company we are proposing that our remuneration is on a time costs basis only, for the following reasons: It ensures that creditors are only charged for work that is performed; We are required to perform a number of tasks which do not relate to the realisation of assets, for example, reporting to creditors, investigating the conduct of the directors, and distributing funds; and We are unable to estimate with certainty the total amount of fees necessary to complete all tasks required in the administration as this will depend on how quickly stock can be sold and/or consigned and the remaining book debts collected. In the next section we include details of our time costs estimate. We estimate that the time costs will total circa 739,000 in relation to the fixed and floating charge realisations and 31,000 in relation to the prescribed part fund in respect of agreeing creditor claims and making a distribution to creditors. We have incurred time costs to date of 676,322 representing 1,889 hours. A summary of the work and achievements to date is set out below, with greater detail provided later in this report: Entered into a revised short term consignment agreement with LX Aero on 1 September 2016 to continue sales of the Company s stock. Conducted a sales process for the sale or consignment of the Company s stock. We reviewed 35 offers, on both a consignment and bulk sale basis, and facilitated site visits for interested parties. We entered into contract negotiations for a bulk sale of all the Company s wholly owned stock, and completed a sale on 11 January Making arrangements with the Company s consignors to recover their inventory. We have contracted ongoing warehouse support to help facilitate this in a cost efficient way, but it has required regular attendance by our staff at the Company s trading premises. Reviewing the recoverability of the book debt ledger and taking steps to recover the balance of the ledger. Reviewing the position with regards to various pieces of plant, machinery and fixtures and fittings. The majority of these are being used to facilitate the inventory and return of consignment stock in administration and will be marketed for sale once they are no longer required. A distribution is expected to be made to the unsecured creditors (numbering some 205 creditors) from the prescribed part (currently estimated at 50-80k). Casco Limited - in administration 16 March 2017 PwC 4

23 3. Our fee estimate 3.1. Summary This section provides the following information: Details of the work we propose to undertake; The hourly rates we propose to charge for each part of that work; The time we anticipate each part of the work will take; and Whether we think it will be necessary to seek approval to exceed the amount of the estimate, and if so, why. In the period since our appointment to 18 February 2017 we have incurred time costs of 676,322. We currently estimate that we will incur a further c. 60,678 of time costs in dealing with the outstanding administration matters and bring the process to a close, with total time costs therefore estimated to be c. 739,000. We also estimate there will be a further c. 31,000 of time costs in dealing with the prescribed part distribution, and the cost of this will be paid out of the prescribed part fund. The following tables summarise our anticipated time costs and then provides more detail on each area of work. Time costs are shown at the hourly rates set out later. Table 2.1 Time costs Estimated total costs Actual to 18 February 2017 Category of work Hours Time costs ( 000) Average hourly rate ( /hour) Hours Time costs ( 000) Average hourly rate ( /hour) 1. Strategy & Planning Secured Creditors Assets 1, , Investigations Creditors Accounting & Treasury Statutory & Compliance Tax & VAT Employees & Pensions Total hours and fees estimate 2, , The above table provides an estimate of the anticipated time likely to be required on the various areas of work and in future reports we will provide an update by reference to actual costs incurred. To facilitate such a comparison, we are likely to report costs on the same basis and using our normal rates. Casco Limited - in administration 16 March 2017 PwC 5

24 A more detailed analysis of the time incurred to date is set out in Section Work we propose to undertake The following table provides details of the work we 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 2.2 Work we propose to do: Realisation of floating charge assets and general and statutory tasks - 739,000 Category of work General description Work included 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 Conducting stock takes Reviewing offers for stock Finalising stock sales to interested parties Overseeing the collection of sold stock Return of consignment stock to consignors Property Liaising with landlords Debtors Reviewing and assessing debtors ledgers Debt collection Chattel assets and other assets Reviewing asset listings Liaising with valuers Reviewing status and sales process of vehicle registration plates 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 Third party assets Reviewing leasing documents Liaising with owners/lessors Secured creditors Notifying secured creditors of appointment Preparing reports to secured creditor Responding to secured creditor s queries Making distributions in accordance with security entitlements Creditors Preferential claims Reviewing and agreeing preferential creditor claims Casco Limited - in administration 16 March 2017 PwC 6

25 Category of work General description Work included Creditor enquiries Setting up a dedicated website 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 Receipt and filing proofs of debt when not related to a dividend Employees and pensions Pensions Reviewing insurance policies Issuing statutory notices Dealing with general pension scheme issues and the Pension Regulator regarding ongoing investigations Payroll Reviewing employee files and company s books and records Reviewing awards and payroll structure Trading Investigations Conducting 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 Trading management Liaising with suppliers Liaising with management, staff and the operator Attending on site Authorising purchase orders and other commitments Maintaining purchase order registry Preparing and authorising receipt and payment vouchers Reviewing company s budgets and financial statements Preparing budgets and financial reports Holding meetings to discuss trading position Reviewing reporting from the short term consignment agreement Liaising with council regarding rates position Finalising utility commitments Processing receipts and payments Entering receipts and payments into accounting system. 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 Statutory and Initial letters and Preparing and issuing all necessary initial letters and notices regarding the compliance notifications administration and our appointment Casco Limited - in administration 16 March 2017 PwC 7

26 Category of work General description Work included Case reviews Conducting case reviews after the first month, then every six months Statutory and Proposals and initial Drafting and reviewing a statement of proposals to creditors including compliance meeting of creditors preparing receipts and payments accounts and statutory information Circulating notice of the proposals to creditors, members and the Registrar of Companies Progress reports and Preparing and issuing periodic progress reports to creditors and the extensions Registrar Making applications to creditors or court for the extension of the administration and filing relevant notices if necessary Other meetings / Preparing documents and information for the purpose of obtaining approval resolutions to fees, Category 2 disbursements and other matters in the administration Issuing resolutions to be considered by correspondence Books and records Collecting company books and records where not related to investigatory work Dealing with records in storage Sending job files to storage Other statutory and compliance Filing of documents Updating checklists and diary management system Tax & VAT VAT Gathering information for the initial VAT review Carrying out VAT reviews and subsequent enquiries Preparing VAT returns Liaising with HMRC Tax Gathering information for the initial tax review Carrying out tax reviews and subsequent enquiries Preparing tax computations Liaising with HMRC Preparing a claim for Terminal Loss Relief Accounting and treasury Opening and closing bank account and arranging facilities Dealing with receipts, payments and journals not relating to trading Carrying out bank reconciliations Corresponding with bank regarding specific transfers Administration and planning Strategy and planning Completing tasks relating to job acceptance Preparing fee budgets & monitoring cost Holding team meetings not relating to trading and discussions regarding status of administration Closure procedures Withdrawing undertakings not relating to trading and obtaining clearances from third parties Completing checklists and diary management system Closing down internal systems Casco Limited - in administration 16 March 2017 PwC 8

27 The work undertaken in relation to the sale of assets is of direct financial benefit for the creditors of the Company, as this has resulted in a significantly enhanced realisation in the administration. It was necessary to enter into a short term consignment agreement with LX Aero in order to enhance book debt realisations and maximise realisable value of the stock. Included in the above table are other tasks that we must perform that may not directly benefit creditors financially. These typically relate to fulfilling obligations imposed by statute or regulatory bodies. Table 2.3 Work we propose to do: Prescribed part distribution to unsecured creditors - 31,000 Category of work General description Work included Prescribed part distribution 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 Based on the current estimates of floating charge realisations and costs, we anticipate that the prescribed part fund will be between 50k and 80k. The work in seeking, receiving and adjudicating on unsecured creditor claims is necessary to allow a dividend to be paid to the unsecured creditors from the prescribed part fund. The cost of this falls to be paid out of the prescribed part fund. There are a large number of potential creditors relative to the size of the funds available Our time charging policy and hourly rates The time we charge to the administration is by reference to the time properly given by our staff and us in attending to matters arising. It is our policy to delegate tasks to appropriate members of staff considering their level of experience and any requisite specialist knowledge, supervised accordingly, so as to maximise the cost effectiveness of the work performed. Matters of particular complexity or significance requiring more exceptional responsibility are dealt with by senior staff or the Administrators personally. Set out below are the relevant maximum charge-out rates per hour worked for the grades of staff actually, or likely to be, involved on this assignment. All staff who work on this assignment (including cashiers, support and secretarial staff) charge time directly to the assignment and are included within any analysis of time charged. Time is charged by reference to actual work carried out on the assignment in six minute units. The minimum time charged is three minutes (i.e. 0.5 units). There has been/will be no allocation of any general costs or overhead costs. These rates will apply to each part of our work. A national team has been used on this administration involving both London and regional office staff. Specialist departments with our firm, such as Tax, VAT, Property and Pensions are also used where their expert advice and services are required. Such specialist rates do vary but the figures below provide an indication of the maximum rate per hour. Casco Limited - in administration 16 March 2017 PwC 9

28 Table 3 Charge-out rates With effect to 30 June 2017 Grade Maximum rate per hour (regional) ( ) Maximum rate per hour (London) ( ) Specialist maximum rate per hour ( ) Partner ,250 Director ,175 Senior Manager ,170 Manager Senior Associate Associate Support staff In common with all professional firms, hourly rates increase from time to time over the period of the administration (for example to cover annual inflationary cost increases). Any material amendments to these rates will be advised to the fee approving body when seeking fee approval, and to creditors in our next statutory report Further approval Creditors should be assured that the provision of a fees estimate will not affect the proper conduct of the administration. If the necessary work exceeds (or is likely to exceed) that included in the fees estimate, we can seek consent, usually from the fee approving body, for our fees to exceed the fees estimate. Our fees estimate is based on a number of assumptions, which are explained in Section 5. In broad terms and in our experience, the key issues likely to affect the level of costs are the: availability and quality of the books and records; level of co-operation received, for example: from employees, and continuity of key staff; duration of ongoing trading which requires more supervision and control; level of interest in the assets and speed of any sale; support from external stakeholders, including landlords and suppliers; and any changes to our strategy that might be necessary as a result of the above. In our periodic progress reports, we will keep creditors updated on how our fees are comparing to the fees estimate. If fees are likely to exceed this fees estimate we will need further approval to draw those fees. Casco Limited - in administration 16 March 2017 PwC 10

29 4. Expenses 4.1. 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. Disbursements are a type of expense which is 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 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). We incurred the following disbursements (excluding VAT) during the period from our appointment to 18 February 2017: Category Policy Costs to date 1 All disbursements not falling under Category 2 are recharged at cost Travel Accommodation and subsistence Postage Sundry expenses 4, , , Total 2 Photocopying is charged at 5p per sheet copied only charged for circulars to creditors and bulk copying 2 Mileage is charged at a maximum of 71p per mile (up to 2,000 cc) or 93p per mile (over 2,000 cc) 8, , Total to 18 February , Casco Limited - in administration 16 March 2017 PwC 11