HS Realisations Limited (formerly known as Hewden Stuart Limited) Hewden Properties Limited (Both in Administration) (together, the Companies )

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1 Ernst & Young LLP 100 Barbirolli Square Manchester M2 3EY Tel: Fax: ey.com TO ALL KNOWN CREDITORS 9 January 2017 Ref: CR/SW/AL/CA/NWM/11.1 Direct line: Direct Fax: Please ask for Charlotte Avery Dear Sirs HS Realisations Limited (formerly known as Hewden Stuart Limited) Hewden Properties Limited (Both in Administration) (together, the Companies ) I write further to my appointment as Joint Administrator of the Companies on 22 November 2016 and attach a copy of my statement of proposals in accordance with paragraph 49 of Schedule B1 to the Insolvency Act As you will note from the proposals, there is no prospect of any funds becoming available to unsecured creditors of either of the Companies other than by virtue of the Prescribed Part. As a consequence, I do not propose to summon a meeting of creditors for either Company. Rules 2.31, 2.32 and 7.6 of the Insolvency (Scotland) Rules 1986 provide for creditors to be able to request a meeting if certain conditions are met. I attach a copy of the appropriate Rules for your information. You will note that any request for a meeting must be made within 8 business days of the date on which the proposals were sent out, by creditors whose debts amount to at least 10% of total debts of the relevant Company. The Rules also provide that a meeting can only be held if the expenses of summoning and holding such a meeting are paid by the creditor or creditors making the request and if security is first deposited with me for payment. The meeting may subsequently resolve that the expenses of summoning and holding the meeting are paid out of the assets of the relevant Company as an expense of the Administration. In the event that a creditors meeting is not held, the proposals will be deemed to be accepted, and the Joint Administrators remuneration and Category 2 disbursements and unpaid pre-administration costs incurred with a view to the Company entering administration will be agreed with the secured creditors and the preferential creditors in accordance with the provisions of Rule 2.39(9) and Rule 2.39C of the Insolvency (Scotland) Rules 1986.

2 Should you have any queries relating to this letter or any other aspect of the Administration, please do not hesitate to contact Charlotte Avery of this office on telephone number Yours faithfully for the Companies S J Woodward Joint Administrator Encs: Administrators statement of proposals S J Woodward is licensed in the United Kingdom to act as an insolvency practitioner by The Institute of Chartered Accountants in England and Wales and C P Dempster is licensed in the United Kingdom to act as an insolvency practitioner by The Institute of Chartered Accountants of Scotland. The affairs, business and property of the Companies are being managed by the Joint Administrators, S J Woodward and C P Dempster, who act as agents of the Companies only and without personal liability. We may collect, use, transfer, store or otherwise process (collectively, Process ) information that can be linked to specific individuals ( Personal Data ). We may Process Personal Data in various jurisdictions in accordance with applicable law and professional regulations including (without limitation) the Data Protection Act 1998.

3 Rules 2.31, 2.32 and 7.6 of the Insolvency (Scotland) Rules Meeting requisitioned by creditors The request for an initial creditors' meeting under paragraph 52(2) must be made within 8 business days of the date upon which the administrator sends out his statement of proposals (1) Rule 7.6(2)(a) does not apply if the requisitioning creditor's debt alone is sufficient to meet the requirement of paragraph 52(2)(a) or, as the case may be, paragraph 56(1)(a), without the concurrence of other creditors. (2) In its application to initial creditors' meetings in administration, for the period of 35 days referred to in Rule 7.6(3) there is substituted a period of 28 days. 7.6 Meetings requisitioned (a) (1) Subject to paragraph (8), this Rule applies to any request by a creditor or creditors:- to:- (i) an administrator under paragraph 52(2) or 56(1), or (ii) a liquidator under section 171(3) or 172(3), for a meeting of creditors; or (b) to a liquidator under section 142(3) for separate meetings of creditors and contributories, or for any other meeting under any other provision of the Act or the Rules. (2) Any such request shall be accompanied by:- (a) a list of any creditors concurring with the request, showing the amounts of the respective claims against the company of the creditor making the request and the concurring creditors; (b) from each creditor concurring, written confirmation of his concurrence; and (c) a statement of the purpose of the proposed meeting. (3) If the administrator or, as the case may be, the liquidator considers the request to be properly made in accordance with the Act or the Rules, he shall summon a meeting of the creditors to be held on a date not more than 35 days from the date of his receipt of the request. (4) Expenses of summoning and holding a meeting under this Rule shall be paid by the creditor or creditors making the request, who shall deposit with the administrator or, as the case may be, the liquidator caution for their payment. (5) The sum to be deposited shall be such as the administrator or, as the case may be, the liquidator may determine and he shall not act without the deposit having been made.

4 (6) The meeting may resolve that the expenses of summoning and holding it are to be payable out of the assets of the company as an expense of the administration or, as the case may be, the liquidation. (7) To the extent that any caution deposited under this Rule is not required for the payment of expenses of summoning and holding the meeting, it shall be repaid to the person or persons who made it. (8) This Rule applies to requests by a contributory or contributories for a meeting of contributories, with the modification that, for the reference in paragraph (2) to the creditors' respective claims, there shall be substituted a reference to the contributories' respective values (being the amounts for which they may vote at any meeting). (9) This Rule is without prejudice to the powers of the court under Rule 4.67(2) (voluntary winding up succeeded by winding up by the court).

5 HS Realisations Limited (formerly known as Hewden Stuart Limited) Hewden Properties Limited The Rigging House Limited Woodster Realisations Limited (formerly known as Interlift Limited) (all in Administration) Administrators statement of proposals Pursuant to paragraph 49 of schedule B1 to the Insolvency Act January 2017

6 Abbreviations The following abbreviations are used in this report: ABL A Plant Asset Based Lender Ashtead Plant Hire Company Limited the Act The Insolvency Act 1986 the Board BAML CAM the Companies The Group s board of directors Bank of America Merrill Lynch Czech Asset Management Date of Appointment 22 November 2016 the Directors EBITDA EA EV EY FYXX the Group Hilton-Baird HS Realisations Interlift Management ML OLV the Prescribed Part Properties the Proposals Rigging the Syndicate Refers to all of the Companies that are in Administration together, being HS Realisations Limited, Hewden Properties Limited, The Rigging House Limited and Woodster Realisations Limited Adrian Murphy (CEO), Chris Hull (CFO), Mark Hierons (Operations) and Susan Shardlow (New Business) Earnings before interest, taxation, depreciation and amortisation Euro Auctions UK Limited European Valuations Ernst & Young LLP Financial year ending XX HS Realisations Limited and its subsidiaries Hilton-Baird Collection Services Limited HS Realisations Limited (formerly known as Hewden Stuart Limited) Interlift Limited, a trading subsidiary of HS Realisations, subsequently renamed Woodster Realisations Limited The Group s management, comprising Adrian Murphy (CEO), Chris Hull (CFO), Kumar Bhamidipati (Asset Management), Mark Hierons (Operations), Gary Thompson (Sales & Marketing), Hilary Tew (HR) and Susan Shardlow (New Business) Morris Leslie Plant Limited Orderly Liquidation Value The proportion of floating charge assets set aside for unsecured creditors pursuant to section 176A of the Insolvency Act 1986 Hewden Properties Limited The Administrators statement of proposals, being this document and its appendices The Rigging House Limited The syndicate of ABLs, comprising: Bank of America NA (London branch), Wells Fargo Capital Finance (UK) Limited, Ernst & Young i

7 TUPE Woodster PNC Business Credit (a trading style of PNC Financial Services UK Ltd), Shawbrook Bank Ltd, Siemens Financial Services Inc, and Lloyds Bank PLC Transfer of Undertakings (Protection of Employment) Regulations Woodster Realisations Limited (formerly known as Interlift Limited) Ernst & Young ii

8 Contents 1. Introduction, background and circumstances giving rise to the Administrations Purpose, conduct and exit from administration Directors Statements of Affairs The Prescribed Part Administrators' remuneration and expenses Pre administration costs Appendix A Statutory information Appendix B Directors' statement of affairs Appendix C Joint Administrators remuneration and expenses Appendix D Joint Administrators' receipts and payments account Appendix E Statement of pre administration costs Appendix F Letter to Creditors dated 28 November 2016 outlining matters regarding the pre-packaged sale to A Plant Ernst & Young iii

9 Section 1: Introduction, background and circumstances giving rise to the appointment 1. Introduction, background and circumstances giving rise to the Administrations 1.1 Purpose of this document On 22 November 2016, the Companies entered Administration and S J Woodward and C P Dempster were appointed to act as Joint Administrators. This document, including its appendices, constitutes the Joint Administrators statement of proposals to creditors, pursuant to paragraph 49 of Schedule B1 to the Insolvency Act 1986, Rule 2.25 of the Insolvency (Scotland) Rules 1986 and Rule 2.33 of the Insolvency Rules Certain statutory information relating to the Companies and the appointment of the Joint Administrators is provided at Appendix A. 1.2 Background Overview of the Group A Group structure chart is shown above. The ultimate parent of the Group is Zeus Topco III Limited, a holding company which, through its intermediate subsidiaries, Zeus Topco II Limited and Zeus Topco I Limited, indirectly holds 100% of the share capital in HS Realisations. Zeus Topco III Limited was incorporated on 30 April HS Realisations, formerly known as Hewden Stuart Limited, was the main trading entity of the Group and the immediate parent of Properties and Woodster. In addition to its shareholdings in its subsidiaries, it holds the majority of the assets belonging to the Group. It was incorporated on 16 May 1968 and was originally registered under the name Hewden Plant Holdings Limited. Ernst & Young 1

10 Section 1: 1. Introduction, background and circumstances giving rise to the appointment Properties was originally incorporated on 8 February 1966 under the name Rayburn Plant Limited. Its principal activity was the letting of properties to HS Realisations, with minimal activities outside of this. Woodster (formerly known as Interlift) was incorporated on 28 February 2006 under the name Lift Rite Material Handling Limited and was acquired by HS Realisations in January Woodster specialised in lifting and material handling equipment used with plant and machinery. Rigging was incorporated on 26 September 2011 as CDC Global Limited and is the wholly owned subsidiary of Woodster. The company acted as the online sales business for Woodster The Group s operations The principal activity of the Group was a plant hire business. The business is headquartered in Trafford, Greater Manchester and at the time of the Joint Administrators appointment traded from 26 depots and a further seven customer sites spread across the UK. Profitability was assessed on a depot by depot basis. The main trading entity was HS Realisations, which had the following six main divisions: Plant Cranes Access Power generation Tools, lighting, non-mechanical and other On-site/industrial Woodster specialised in lifting and material handling equipment. Properties held the majority of the Group s freehold and leasehold property interests (valued by CBRE in September 2014 at c. 6.2m) Financial history Over recent financial years, the revenue and EBITDA of the Group deteriorated, whilst interest and fees on borrowings increased significantly. A summary of the financial performance of the Group is provided below: 000 FY11 FY12 FY13 FY14 FY15 FY16 Forecast Revenue 119, ,856 95,391 90,812 83,788 84,100 EBITDA 36,011 32,772 26,011 23,952 26,754 15,600 Interest & fees (3,213) (5,928) (7,893) (9,700) (12,500) (13,400) Funding structure The Group operated with a c. 135m ABL working capital facility provided by the Syndicate. The Syndicate hold fixed and floating charge debentures over Zeus Topco II Limited, Zeus Topco Limited, HS Realisations, Woodster, Rigging and Properties. Cross guarantees exist between HS Realisations and Properties. Woodster, Zeus Topco Limited, Rigging and Zeus Topco II Limited are also guarantors to the Group s borrowing from the Syndicate. Ernst & Young 2

11 Section 1: 1. Introduction, background and circumstances giving rise to the appointment As well as an English law debenture, the Syndicate holds a Scottish law debenture over HS Realisations and Properties. In addition, a further second lien secured debt of 56.4m was owed to CAM at the date of appointment. Syndicate lending is prioritised ahead of amounts owed to CAM under an intercreditor deed. 1.3 Circumstances Giving Rise to the Appointment of the Joint Administrators Following a further downturn in trading in 2016, the Group breached its covenants in September 2016 in relation to its secured borrowings and experienced significant cash flow pressure. To reduce debt, Management solicited offers for the Group s Access division in Summer A number of offers from trade buyers were received, but no agreement for sale was reached. On 21 September 2016, with the Group in breach of its covenants and unable to meet its payments to CAM, EY were engaged by the Group s ABL lenders to analyse the Group s short term cash flow on a rolling basis, evaluate initial options for the lenders, and appraise and comment on the Group s business plan. Throughout the remainder of September and October, the financial position of the Group destabilised further, with a projected funding shortfall which could not be bridged. In October, Management and its advisors, Deloitte, therefore commenced a marketing process in respect of the whole Group. As part of this exercise, 14 parties (mainly PE houses and distressed investors) were approached. In light of the deteriorating funding position, and without an alternative funding option which was deliverable, the scope of Deloitte s engagement with the Group was extended in late October 2016 to include a piecemeal accelerated disposal process in tandem with seeking a solvent solution for the business as a whole. EY were subsequently appointed to continue the accelerated disposal process on 7 November During November cash pressure on the Group continued to increase, and it became apparent that none of the interested parties were in a position to table a deliverable going concern proposal. Without a tangible and deliverable going concern solution, the Directors therefore sought the protection of a moratorium, and filed a Notice of Intention to Appoint Administrators on Monday 21 November 2016 and placed the business into administration on 22 November Ernst & Young 3

12 Section 2: Purpose, conduct and end of administration 2. Purpose, conduct and exit from administration 2.1 Purpose of the Administrations The purpose of an administration is to achieve one of three objectives: a) To rescue the company as a going concern. b) To achieve a better result for the company s creditors as a whole than would be likely if the company were wound up (without first being in administration). c) To realise property in order to make a distribution to one or more secured or preferential creditors. Insolvency legislation provides that objective (a) should be pursued unless it is not reasonably practicable to do so or if objective (b) would achieve a better result for the company s creditors as a whole. Objective (c) may only be pursued if it is not reasonably practicable to achieve either objective (a) or (b) and can be pursued without unnecessarily harming the interests of the creditors of the company as a whole. During the pre-appointment accelerated disposal process no offers were received for the shares of any of the Companies. Accordingly, objective (a) could not have been achieved and the objective being pursued is objective (b). The Joint Administrators are of the view that the pre-pack sale of parts of the Group s businesses (as detailed below) enabled a realisation of goodwill and other asset value over and above that which could be achieved in an insolvent liquidation. Furthermore, the Group s principal assets relate to (i) plant, cranes and equipment on hire with customers or at the Group s depot network; (ii) book debts due from the Companies customers; and (iii) freehold and long leasehold property. The protection of the Administration moratoriums provides a greater opportunity to negotiate higher realisations from these assets (and potentially mitigate creditor claims) from further going concern sales of depots whilst on-hire assets are recovered in a controlled manner. It is also likely that potential counterclaims from customers against book debt recoveries will be mitigated in comparison to a winding up. Accordingly, the Joint Administrators are of the view that objective (b) can be achieved for all of the Companies. 2.2 Conduct of the administration Pre-packaged sale of certain of the Companies businesses and/or assets Marketing strategy At 7 November 2016, when the handover of the accelerated disposal process from Deloitte to EY took place, Deloitte had approached 29 parties regarding a piecemeal sale of the business and/or assets of the Group. With the help of EY Lead Advisory sector experts, this was expanded to 41 parties, of which 21 signed non-disclosure agreements. Interested parties were provided with relevant financial information to evaluate the opportunity and undertake an accelerated diligence process. A closing date of 11 November 2016 was set for bids for all or parts of the business and/or assets Conduct of the accelerated sale process Negotiations were conducted with a number of interested parties. In light of the value offered, ability to transact in the timescales required, composite nature of their offer and related benefits to the creditors from preservation of employment (reducing preferential claims) and Ernst & Young 4

13 Section 2: Purpose, conduct and end of administration continuation of operations (protecting book debts), A Plant quickly became the preferred bidder for a number of asset groups Offers received Summarised below are the offers received by the deadline of noon on 11 November 2016: Party A Party B Party C Party D Party E Party F Party G Party H Party I A Plant Cranes Access Plant Power Interlift Other In addition to the marketing process outlined above, we received a copy of valuation advice prepared by EV for BAML as at 15 September 2016 which detailed Orderly Liquidation Values (OLV) for the Group s plant, crane and equipment assets based on a 26 week disposal timeframe. This valuation advice was also utilised to assess the offers received The transactions Immediately upon the appointment of S J Woodward and C P Dempster as Joint Administrators on 22 November 2016 three separate transactions with A Plant were completed: a) Access and Power generation: This transaction included the Access and Power Generation assets owned by the Group across its 26 depots. It did not include any freehold or leasehold property and A Plant were required to transfer the Access and Power generation assets to their depots. Total consideration was 17.9m. b) Business and assets of Woodster and Rigging: This included the business, assets and employees of Woodster, as well as the assets of Rigging. As part of the agreement, A Plant have been granted licences to occupy four leasehold premises in return for meeting the associated occupancy costs. Total consideration was 2.0m. c) On-site/industrial plant business: This transaction included the plant assets, business and employees carried on by the Group at six customer sites across the UK. The consideration was an initial 7m, rising to 9m if certain conditions attaching to this additional consideration are met. In addition, the Hewden brand name was sold for 0.5m. Ernst & Young 5

14 Section 2: Purpose, conduct and end of administration These transactions brought a number of benefits: A Plant continue to operate six of the on-site locations, improving future book debt recoveries, safeguarding jobs, reducing preferential employee claims, and providing a partial de-risk of the significant obligations (including Health & Safety) attaching to trading the on-site business in Administration. The on-going operation of the Interlift business protects book debt realisations, preserves jobs, and reduces preferential employee claims. Protection of the wider book debts of the business associated with the Access and Power Generation equipment. Reduction in the cost of collection and onward transportation of all assets acquired by A Plant. Of the total consideration of 29.4 million, 27.4 million plus VAT (where applicable) was paid on completion. The sum of 2 million is to be paid six months following completion providing that certain conditions are met. This sum was placed in an escrow account at completion. The apportionment of consideration is detailed below: Category of asset Allocated to fixed charge realisations Allocated to floating charge realisations Total HS Realisations Plant assets - 24,899,995 Customer contracts - 1 Goodwill 2,000,001 - Spares - 1 Transferred records - 1 Business Rights - 1 Hewden brand name 500,000-2,500,001 24,899,999 27,400,000 Category of asset Allocated to fixed charge realisations Allocated to floating charge realisations Total Woodster Business name - 1 Business rights - 1 Hire contract - 1 Goodwill 399,995 - Plant assets - 1,590,000 Spares - 1 Transferred records ,995 1,590,005 1,990,000 Ernst & Young 6

15 Section 2: Purpose, conduct and end of administration Category of asset Allocated to fixed charge realisations Allocated to floating charge realisations Total Rigging Plant assets 8,000 Fixtures and fittings 2,000-10,000 10,000 2,899,996 26,500,004 29,400,000 In the event that the 2m held in Escrow is received, the total recoveries from goodwill and plant outlined above (totalling c. 28.9m) will represent c.91% of EV s OLV. This was considered attractive in the light of the additional advantages of the transaction outlined above Going concern depot sales Following the completion of the A Plant transaction the remaining business and assets of the Companies were offered for sale, principally on a going concern basis. Since appointment, 8 depots have been sold as part of going concern transactions to 4 parties as follows: Purchaser Morris Leslie JK Ashbrook GAP Group John Nixon Limited Depot Bedford Inverness Whitehaven Willenhall Bangor Warrington Lewes Nottingham Total consideration for plant received to date from these sales totals 28.9m, being approximately 91% of OLV, with 65 employees transferred from these depots to the purchasers under TUPE. In addition, total consideration for property transactions of 1.6m has been agreed, of which 0.2m relates to consideration actually received for the sale of the Bangor freehold (to JK Ashbrook) and 1.4m relates to options to purchase the freehold (Willenhall) and leasehold (Whitehaven) now occupied by Morris Leslie Communication with creditors in accordance with SIP 16 Statement of Insolvency Practice 16 (SIP 16) states that an Administrator s statement of proposals should ideally be sent to creditors with the initial notification of the pre-pack sale, (which is to be sent within 7 calendar days of the transaction), or if this does not prove possible that the proposals should include an explanation of the reason for the delay. Following the pre-pack transaction with A Plant the majority of the assets of the Companies remained to be realised, and the controlled wind down and going-concern/piecemeal disposal of the Group s depot network still needed to be implemented. Ernst & Young 7

16 Section 2: Purpose, conduct and end of administration It was therefore considered more appropriate to send out these Proposals separately to the Statement of Insolvency Practice 16 (SIP16) letter to creditors (dated 28 th November 2016 and attached at Appendix G) to allow details of the strategy to realise the Companies remaining assets to be outlined to creditors in further detail Other asset realisations HS Realisations As the main trading entity of the Group, HS Realisations holds the majority of the Group s remaining assets. HS Realisations main remaining assets are as follows: Cranes, Plant and Other equipment Assets with a net book value of c. 62.4m (including cranes c. 24.9m) remain following the A Plant and 8 depot transactions outlined above. On 21 December 2016, the Joint Administrators engaged EA as selling agents to dispose of these remaining assets by private tender (cranes only) and auction in the first half of 2017 (unless further bulk transactions of assets can be achieved at acceptable values in the meantime). It is anticipated that further realisations of in excess of c. 50m will be forthcoming from the sale of these remaining assets. Book Debts Realisations from book debts as at 15 December 2016 totalled c. 3.8m out of total ledger balances at appointment of c. 17.3m. We continue to pursue the customers for payment of outstanding balances and are working to understand and realise disputed balances where relevant as soon as possible. Cash at appointment Cash at appointment is estimated to realise c. 0.1m per the directors statement of affairs. We are in the process of transferring balances from the Companies pre-appointment bank accounts to the Administrators floating charge accounts. Other assets We continue to review company records to identify other assets that may be available and to determine recoverability Properties This company s main assets comprise freehold and long leasehold property used by the Group as depots. Property Realisations to date comprise c. 0.2m from the sale of the Bangor freehold property to J K Ashbrook (as outlined in section 2.2.2). We anticipate further realisations from the following freehold and long leasehold properties once the remaining plant and equipment assets at these depots have been sold: Ernst & Young 8

17 Section 2: Purpose, conduct and end of administration Depot property Tenure Comment Wokingham Freehold Glasgow Long leasehold Willenhall Freehold Option to purchase granted to ML for c. 1.1m (see section 2.2.2). Dagenham Freehold Dundee Freehold Newton Abbott Freehold Redditch Freehold Swansea Long leasehold Whitehaven Long leasehold Option to purchase granted to ML for c. 0.2m (see section 2.2.2). Cash at appointment and other assets Cash at appointment comprised c. 33k (per the directors statement of affairs). We are in the process of transferring balances from the Companies pre appointment bank accounts to the Administrators floating charge accounts. We continue to review company records to identify other assets that may be available and to determine recoverability Woodster The principal remaining assets of Woodster following the pre-pack sale to A Plant comprise debtors and cash at the date of appointment. Book debts Rigging Realisations from book debts (as at 16 December) total c. 0.2m compared to ledger balances (including inter-company) of c. 1.1m at appointment. The Joint Administrators have appointed and continue to utilise collection agents Hilton-Baird to assist with pursuing and collecting these debts. Cash at appointment and other assets Cash at date of appointment comprised c. 0.3m. We are in the process of transferring this to the Administrators floating charge account. We continue to review company records to identify other assets that may be available to determine recoverability. The principal remaining assets of Rigging, following the pre-pack sale to A Plant, comprise debtors and cash at the date of appointment. Book debts Realisations from book debts (as at 16 December) total nil against ledger balances (including intercompany) of c. 0.1m at appointment. Cash at appointment and other assets Cash at the date of appointment comprised c. 25k and we are in the process of transferring this to the Administrators floating charge account. We continue to review company records to identify other assets that may be available and to determine recoverability. Ernst & Young 9

18 Section 2: Purpose, conduct and end of administration 2.3 Administrators receipts and payments A summary of the Joint Administrators receipts and payments for each of the Companies, for the period from 22 November 2016 to 16 December 2016, is attached at Appendix D. The receipts and payments accounts have been prepared on a cash basis and do not take into account any future realisations and costs. 2.4 Initial meeting of creditors The Joint Administrators are of the opinion that each of the Companies have insufficient property to enable a distribution to be made to unsecured creditors other than by virtue of the Prescribed Part. Consequently, in accordance with the provisions of paragraph 52(1) of Schedule B1 to the Act, they do not intend to call an initial creditors meeting in respect of any of the Companies. The Prescribed Part is explained at section 4 below. The Joint Administrators will be obliged to call an initial meeting of creditors if it is requested by the creditors of any of the Companies whose debts amount to at least 10% of the total debts of the respective company. The request must be made within eight business days of the date on which the Proposals are sent out (or such longer period as the court may allow) and must be in the prescribed form. The creditor summoning the meeting must lodge with the Joint Administrators a deposit as security for the expenses of summoning and holding the meeting. 2.5 Future conduct of the Administrations The Joint Administrators will continue to deal with the Administrations in line with the stated objectives. Future tasks will include, but are not limited to, the following: Continuing to trade the Companies with a view to the orderly wind-down of activities; Overseeing the off hire processes for assets currently on hire with customers at such time as the relevant hire agreements come to an end (or earlier); Marketing and selling the remaining plant, property (freehold and leasehold) and other tangible assets held by the Group, either directly or through our agents EA (and/or any other agents that are appointed); Negotiating with landlords regarding leasehold premises; Collecting remaining book debts, including non-trade balances; Assisting redundant employees with any claims against the Redundancy Payments Office or the Companies; Discharging Administrators trading liabilities and collecting Administration debts; Completion of the statutory requirements of the Administrations, including reporting to creditors and investigations into the conduct of the directors (as necessary); Preparing post appointment corporation tax and VAT returns; Making distributions to the secured and preferential creditors; Making distributions to the unsecured creditors in respect of the Prescribed Part; Finalising the Administrations including the payment of all Administration liabilities; and Any such actions the Joint Administrators consider, in their reasonable opinion, are necessary and/or expedient to fulfil the purpose of the Administrations. Ernst & Young 10

19 Section 2: Purpose, conduct and end of administration 2.6 The end of the Administrations The Administrations will end automatically on 21 November 2017, although they can be extended by creditors or by the Court. Dissolution It is proposed that if, at the end of the Administrations, any of the Companies have no property which might permit a distribution to their respective unsecured creditors other than sums due under the Prescribed Part (if any), the Joint Administrators will send a notice to that effect to the Registrar of Companies. On registration of the notice, the Joint Administrators appointment in respect of the company concerned will come to an end. In accordance with the provisions of paragraph 84(6) of Schedule B1 to the Insolvency Act 1986, the company concerned will be deemed to be dissolved three months after the registration of the notice. Creditors Voluntary Liquidation It is proposed that if at the end of the Administrations, any of the Companies has property to distribute to unsecured creditors other than sums to be distributed under the Prescribed Part (if any), the Company concerned will move straight into Creditors Voluntary Liquidation upon the filing with the Registrar of Companies of a notice pursuant to paragraph 83 of Schedule B1 to the Act. It is proposed that the Joint Liquidators will be S J Woodward and C P Dempster of EY and that any act required or authorised to be done by the Joint Liquidators may be done by either or both of them. In accordance with paragraph 83(7) of Schedule B1 to the Act, Rule 2.47(3) of the Insolvency (Scotland) Rules 1986 and Rule 2.117A(2)(b) of the Insolvency Rules 1986, creditors may nominate a different person(s) as the proposed Liquidator(s), provided that the nomination is made after the receipt of these Proposals and before the Proposals are approved. It should be noted in this regard that a person must be authorised to act as an insolvency practitioner to be appointed as Liquidator. At this stage, the Joint Administrators consider it unlikely that any of the Companies will have sufficient property to distribute to unsecured creditors other than the Prescribed Part. Ernst & Young 11

20 Section 3: Statement of affairs 3. Directors Statements of Affairs The Joint Administrators requested that the Directors prepare a Statement of Affairs in respect of each of the Companies by 5 December An extension of this deadline to 16 December 2016 was granted by the Joint Administrators to allow more time to obtain accurate estimates of creditor liabilities and asset values. The Directors submitted their Statements of Affairs for each company on 16 December These are provided in Appendix B. We provide below a summary of the Joint Administrators comments on the Statement of Affairs. Basis of preparation The Statements of Affairs are stated before the costs of realisation. The figures have been compiled by the Directors and have not been subject to independent review or statutory audit. HS Realisations The directors estimate realisations in respect of assets subject to fixed charges of c. 15.0m, and in respect of assets subject to floating charges of c. 97.0m (principally hire assets totalling c. 95.2m). Whilst these estimates seem reasonable in the context of realisations since the date of the Joint Administrators appointment, there remains uncertainty surrounding the collectability of certain of HS Realisations book debts and the likely quantum of realisations from remaining hire assets which have not yet been sold (albeit the Joint Administrators have sought to guarantee minimum realisations from EA). Properties The directors estimate realisations in respect of assets subject to fixed charges of c. 5.9m, all of which relates to freehold or long leasehold property. Whilst this estimate appears reasonable, overall recoveries from property remain subject to uncertainty until remaining freehold and long leasehold depots are vacated and offered for sale. Realisations in respect of assets subject to floating charges comprise cash at bank and intercompany debtors, and total c. 137k. The majority of these floating charge realisations relate to intercompany book debts, which are estimated to realise c. 104k, in comparison to book values of c. 26.2m. The Joint Administrators are currently assessing the extent and quantum of intercompany balances, but as the four main entities within the Group are all subject to insolvency proceedings, intercompany book debt realisations are likely to reflect prescribed part distributions from other administrations only. Woodster The directors estimate realisations in respect of assets subject to fixed charges of c. 400k, all of which relates to goodwill in respect of the sale of the business and assets of Woodster. This is in accordance with the consideration received from the A Plant pre-pack transaction. Of the directors estimated floating charge realisations (c. 2.6m), an amount of c. 1.6m relates to consideration received upon the sale to A Plant. Realisations in respect of book debts (estimated by the directors at c. 688k) remain uncertain. Ernst & Young 12

21 Section 3: Statement of affairs Rigging There are no assets subject to fixed charges. The directors estimate to realise c. 164k in respect of floating charge assets. The amount likely to be realised from book debts (forecast by the directors at c. 77k) remains uncertain. Secured creditors At the date of appointment, the Group owed c. 98.9m in senior debt to the Syndicate, and a further 56.4m to CAM as second lien subordinated debt (both before post-appointment interest and charges). Since the appointment of the Joint Administrators, the following amounts have been distributed to the Syndicate as first ranking secured lenders: Date Company Amount ( m) Comment 29 Nov 16 H S Realisations 15.0 Floating charge distribution 06 Dec 16 Woodster 0.4 Fixed charge distribution 06 Dec 16 H S Realisations 0.4 Fixed charge distribution 14 Dec 16 H S Realisations 20.1 Floating charge distribution 14 Dec 16 Properties 0.2 Fixed charge distribution 22 Nov Dec 16 H S Realisations 3.8 Fixed charge distribution of book debts 39.9 We currently estimate that the senior ABL Syndicate will be repaid in full, while CAM will suffer a shortfall. Preferential creditors We currently estimate preferential creditors claims to be in the region of c. 0.6m, all of which relates to the creditors of HS Realisations. This remains uncertain given that it relates to employee claims for arrears of wages and holiday pay, and includes a subrogated claim from the Redundancy Payments Office in respect of unpaid salaries and pensions contributions. We currently expect that these claims will be settled in full. Non-preferential creditors The Joint Administrators continue to receive claims from non-preferential creditors of the Companies. At this stage, we do not anticipate that there will be funds available for distribution to unsecured creditors other than by virtue of the Prescribed Part. It remains too early to estimate the likely quantum of non-preferential claims, but we anticipate that the majority of claims will be in the Administration of HS Realisations, as the largest trading entity. Ernst & Young 13

22 Section 4: Prescribed part 4. The Prescribed Part The Prescribed Part is a proportion of floating charge assets set aside for unsecured creditors pursuant to section 176A of the Insolvency Act The prescribed part applies to floating charges created on or after 15 September The floating charges held by the Syndicate and CAM were created after 15 September 2003 and accordingly section 176A of the Act does apply to these Administrations and a Prescribed Part will be set aside for unsecured creditors of the Companies, to the extent there is sufficient net property. It is too early to determine with certainty the Net Property and Prescribed Part for each of the Companies. However, based on the Directors Statement of Affairs, after applying an estimate of the Administration costs, we would estimate the Net Property and Prescribed Part as follows: m HS Realisations Hewden Properties Rigging Woodster Net property Estimated Prescribed Part Please note that as the above are based on estimates of forecast future costs of the Administrations and future asset realisations, the actual Prescribed Parts may differ from the above. The Joint Administrators currently do not intend to make an application to the Court under Section 176A(5) of the Act for an order not to distribute the Prescribed Part in any of the Companies. Ernst & Young 14

23 Section 5: Administrators' Remuneration and Disbursements 5. Administrators' remuneration and expenses 5.1 Remuneration The statutory provisions relating to remuneration are set out in Rule 2.39 of the Insolvency (Scotland) rules 1986 (in respect of HS Realisations and Properties), and Rule of the Insolvency Rules 1986 (in respect of Rigging and Woodster). Further information is given in the Association of Business Recovery Professionals publication A Creditors Guide to Administrators Fees, a copy of which may be accessed from the web site of the Insolvency Practitioners Association at (follow Regulation and Guidance then Creditors Guides then Administrators Fees (October 2015) ), or is available in hard copy upon written request to the Joint Administrators. In respect of each of the Companies, in the event that a creditors meeting is not requisitioned and a creditors committee is not formed, in accordance with Rule 2.39 of the Insolvency (Scotland) Rules 1986 (for HS Realisations and Properties) and Rule 2.106(5A) of the Insolvency Rules 1986 (for Rigging and Woodster), the Joint Administrators will seek to have their remuneration fixed by the secured creditors and, if the Joint Administrators have made or intend to make a distribution to preferential creditors, the preferential creditors. The Joint Administrators will ask for their remuneration to be fixed on the basis of time properly given by them and their staff in dealing with matters arising in the Administrations. Attached at Appendix C is a detailed analysis of time spent and charge out rates, for each grade of staff for the various areas of work carried out to 16 December 2016, as required by the Association of Business Recovery Professionals Statement of Insolvency Practice 9. A summary of these costs are below: Name Remuneration ( ) HS Realisations 1,710, Hewden Properties 39, The Rigging House 13, Woodster Realisations 52, Total 1,815, A summary of the work undertaken to 16 December 2016 is shown below: Accounting and administration (all Companies). Set up of post appointment bank accounts and general accounting and treasury matters. Bank and statutory reporting (all Companies). Providing updates to the Syndicate and CAM, in addition to statutory reporting requirements. Creditors (all Companies). Dealing with enquiries from creditors and logging unsecured claims. Assessing and discharging secured and preferential claims. Debtors (all Companies). Working to collect pre appointment trade debtor balances including reconciling the pre and post appointment cut-off. Depot visits (HS Realisations and Woodster). Attendance at all of the Companies premises by a member of EY staff to ensure on appointment processes were followed. Employee matters (all Companies except Properties and Rigging). Dealing with enquiries from former employees regarding their preferential and unsecured claims against the estate. Ernst & Young 15

24 Section 5: Administrators' Remuneration and Disbursements Health and safety (all Companies). Monitoring and ensuring ongoing compliance with relevant health and safety legislation. Immediate tasks (all Companies). Dealing with immediate on appointment notices and set up processes. Attending the Companies main sites to issue notices and secure assets. Investigations (all Companies). On site work to capture data from the Companies IT systems. Initial investigatory work into directors conduct. Job acceptance and strategy (all Companies). Ensuring the required engagement acceptance procedures were followed and establishing initial strategy for the trading period. Other assets (all Companies). Securing cash and other assets, including cranes, plant and equipment, held by the Companies at date of appointment. Analysis of the Companies assets. Repatriation of assets from customers to the Companies premises. Appointment and management of agents including EA. Disposal of these assets and accounting for the proceeds. Property (all Companies except Rigging). Discussions and negotiations with the Companies landlords, appointment of agents and realisation strategy in respect of the Companies freehold and leasehold premises. Retention of title (HS Realisations). Reviewing and dealing appropriately with any retention of title claims made by the Companies creditors. Negotiating and settling retention of title claims. Sale of business (all Companies). Marketing and completion of sales of the Companies business and assets (as outlined in these proposals) held at the date of appointment. Statutory duties (all Companies). Various on appointment statutory requirements. Preparation of a letter to the Companies creditors regarding the pre-packaged sale to A Plant in accordance with Statement of Insolvency Practice 16. Preparation of the Proposals. Trading (HS Realisations). Dealing with such matters as are necessary during the Administration trading period, including liaising with customers and managing off hire processes for the Companies assets. VAT & Taxation (all Companies). Filing of on appointment notices to HMRC, ongoing tax compliance work. Other matters (all Companies). Such other matters as the Joint Administrators deemed necessary but which fall outside the scope of the above activities. 5.2 Disbursements Appendix C also includes a statement of the Joint Administrators policy for charging disbursements. Category 1 disbursements In line with Statement of Insolvency Practice 9, it is the Joint Administrators policy to disclose Category 1 expenses but not seek approval to draw them. As at 16 December 2016, 5, of Category 1 disbursements had been incurred in the Administration of HS Realisations. No Category 1 disbursements had been incurred in the Administrations of the other Group companies. Ernst & Young 16

25 Section 5: Administrators' Remuneration and Disbursements Category 2 disbursements In respect of each of the Companies, in the event that a creditors meeting is not requisitioned and a creditors committee is not formed, the Joint Administrators will seek the approval of the secured creditors (and preferential creditors, if applicable) to charge Category 2 disbursements. As at 16 December 2016, 1, of Category 2 disbursements have been incurred in the Administration of HS Realisations Limited. No Category 2 disbursements had been incurred in the Administrations of the other Group companies. Payments to other professionals The Joint Administrators have engaged the following other professionals to assist them. They were chosen on the basis of their experience in similar assignments: Name of firm Nature of service How contracted to be paid Addleshaw Goddard LLP Legal services Time cost basis Euro Auctions UK Limited Plant/equipment advisors and agents Phase 1 (advisory): time cost basis Phase 2 (selling agency): percentage of realisations (subject to a cap) Hilton-Baird Debtor collection services Percentage of realisation Metis Partners Valuation advice Fixed fee 6, in fees has been paid to these other professionals to 16 December Ernst & Young 17

26 Section 6: Pre administration costs 6. Pre administration costs The Joint Administrators are seeking approval for payment of unpaid pre administration costs (fees and expenses) totalling 261, plus VAT, broken down as follows: HS Realisations EY (Remuneration: 96, plus VAT, Disbursements: 3, plus VAT) Addleshaw Goddard LLP ( 115, plus VAT) Metis Partners ( 6, plus VAT) Woodster Addleshaw Goddard ( 40, plus VAT) The payment of unpaid pre administration costs as an expense of the administration is subject to approval under Rule 2.39C of the Insolvency (Scotland) Rules 1986 (HS Realisations and Properties) and Rule 2.67A of the Insolvency Rules 1986 (Woodster and Rigging), and not part of the proposals subject to approval under paragraph 53. This means that they must be approved separately from the proposals. A breakdown of the total pre administration costs incurred and amounts paid pre administration (if any) is attached at Appendix E. Further information is provided below. Prior to the date of the appointment, EY was engaged to run an accelerated sale process. In addition to this work, significant planning work was also undertaken to ensure the sale was executed expediently, other assets not included in the sale were safeguarded and any required consultation with stakeholders could be carried out swiftly and efficiently. Further details of EY s pre-administration work are outlined in the letter to creditors pursuant to Statement of Insolvency Practice 16, attached at Appendix F. In addition to the above, work was carried out by additional third parties (Addleshaw Goddard and Metis Partners), primarily in the week leading up to the appointment of the Joint Administrators, which was not covered by EY s pre-appointment engagement letter with the Group. The breakdown of the pre-appointment costs attached at Appendix E sets out: The fees charged by the Joint Administrators. The expenses incurred by the Joint Administrators. The fees charged (to the Joint Administrators knowledge) by any other person qualified to act as an insolvency practitioner (and if more than one, by each separately). The expenses incurred (to the Joint Administrators knowledge) by any other person qualified to act as an insolvency practitioner (and if more than one, by each separately). In the event that a creditors meeting is not requisitioned and a creditors committee is not formed, the Joint Administrators will seek to have the unpaid pre administration approved by the secured creditors and, if the Joint Administrators made or intend to make a distribution to preferential creditors, the preferential creditors. Ernst & Young 18

27 Appendix A: Statutory Information Appendix A Statutory information Company Information Company Name: Registered Office Address: Registered Number: Trading Name: Trading Address: HS Realisations Limited (formerly Hewden Stuart Limited) 10 George Street, Edinburgh, EH2 2DZ SC Hewden Stuart Limited 9 th Floor, Trafford House, Chester Road, Stretford, Manchester, M32 0RL Details of the Joint Administrators and of their appointment Administrators: S J Woodward and C P Dempster Date of Appointment: 22 November 2016 By Whom Appointed: Court Reference: The appointment was made by the Directors pursuant to Paragraph 22 of Schedule B1 to the Insolvency Act 1986 P1124 of 2016 (Court of Session, Parliament House, Edinburgh) Any of the functions to be performed or powers exercisable by the Joint Administrators may be carried out/exercised by either of them acting alone or by both of them acting jointly. Statement concerning the EC Regulation The EC Council Regulation on Insolvency Proceedings does apply to this administration and the proceedings are main proceedings. This means that this Administration is conducted according to UK insolvency legislation and is not governed by the insolvency law of any other European Union Member State. Share capital Authorised Issued and fully paid Shareholder Number Number Zeus Topco Limited 896,021,005 Ordinary ,021,005 89,602,100 Directors and secretary and their shareholdings Name Director or Secretary Date appointed Date resigned Current shareholding Susan Shardlow Director and Company Secretary 5 May 2010 n/a None Christopher John Hull Director 11 May 2015 n/a None Mark Hierons Director 1 May 2013 n/a None Adrian Michael Murphy Director 31 January 2015 n/a None Ernst & Young 19

28 Appendix A: Statutory Information Company Information Company Name: Registered Office Address: Registered Number: Trading Name: Trading Address: Hewden Properties Limited 10 George Street, Edinburgh, EH2 2DZ SC Hewden Properties Limited 9 th Floor, Trafford House, Chester Road, Stretford, Manchester, M32 0RL Details of the Joint Administrators and of their appointment Administrators: S J Woodward and C P Dempster Date of Appointment: 22 November 2016 By Whom Appointed: Court Reference: The appointment was made by the Directors pursuant to Paragraph 22 of Schedule B1 to the Insolvency Act 1986 P1125 of 2016 (Court of Session, Parliament House, Edinburgh) Any of the functions to be performed or powers exercisable by the Joint Administrators may be carried out/exercised by either of them acting alone or by both of them acting jointly. Statement concerning the EC Regulation The EC Council Regulation on Insolvency Proceedings does apply to this administration and the proceedings are main proceedings. This means that this Administration is conducted according to UK insolvency legislation and is not governed by the insolvency law of any other European Union Member State. Share capital Shareholder Authorised Issued and fully paid Number Number Hewden Stuart Limited 100 Ordinary shares Directors and secretary and their shareholdings Name Susan Shardlow Christopher John Hull Director or Secretary Date appointed Date resigned Director and Company Secretary 5 May 2010 n/a None Director 11 May 2015 n/a None Mark Hierons Director 1 May 2013 n/a None Adrian Michael Murphy Director 31 January 2015 n/a None Current shareholding Ernst & Young 20

29 Appendix A: Statutory Information Company Information Company Name: Registered Office Address: The Rigging House Limited 100 Barbirolli Square, Manchester, M2 3EY Registered Number: Trading Name: Trading Address: The Rigging House Limited Trident Business Centre, Startforth Road, Middlesbrough, TS2 1PY Details of the Joint Administrators and of their appointment Administrators: S J Woodward and C P Dempster Date of Appointment: 22 November 2016 By Whom Appointed: The appointment was made by the Directors pursuant to Paragraph 22 of Schedule B1 to the Insolvency Act 1986 Court Reference: 3099 of 2016 (High Court of Justice, Chancery Division, Manchester District Registry) Any of the functions to be performed or powers exercisable by the Joint Administrators may be carried out/exercised by either of them acting alone or by both of them acting jointly. Statement concerning the EC Regulation The EC Council Regulation on Insolvency Proceedings does apply to this administration and the proceedings are main proceedings. This means that this Administration is conducted according to UK insolvency legislation and is not governed by the insolvency law of any other European Union Member State. Share capital Shareholder Authorised Issued and fully paid Number Number Interlift Limited 100 Ordinary Directors and secretary and their shareholdings Name Susan Shardlow Christopher John Hull Director or Secretary Date appointed Date resigned Director and Company Secretary 12 January 2016 n/a None Director 12 January 2016 n/a None Mark Hierons Director 12 January 2016 n/a None Adrian Michael Murphy Director 12 January 2016 n/a None Current shareholding Ernst & Young 21

30 Appendix A: Statutory Information Company Information Company Name: Registered Office Address: Woodster Realisations Limited (formerly Interlift Limited) 100 Barbirolli Square, Manchester, M2 3EY Registered Number: Trading Name: Trading Address: Interlift Limited Trident Business Centre, Startforth Road, Middlesbrough, TS2 1PY Details of the Joint Administrators and of their appointment Administrators: S J Woodward and C P Dempster Date of Appointment: 22 November 2016 By Whom Appointed: The appointment was made by the Directors pursuant to Paragraph 22 of Schedule B1 to the Insolvency Act 1986 Court Reference: 3100 of 2016 (High Court of Justice, Chancery Division, Manchester District Registry) Any of the functions to be performed or powers exercisable by the Joint Administrators may be carried out/exercised by either of them acting alone or by both of them acting jointly. Statement concerning the EC Regulation The EC Council Regulation on Insolvency Proceedings does apply to this administration and the proceedings are main proceedings. This means that this Administration is conducted according to UK insolvency legislation and is not governed by the insolvency law of any other European Union Member State. Share capital Class Authorised Issued and fully paid Number Number Hewden Stuart Limited Hewden Stuart Limited 5 Ordinary B Ordinary A Directors and secretary and their shareholdings Name Susan Shardlow Christopher John Hull Director or Secretary Date appointed Date resigned Director and Company Secretary 12 January 2016 n/a None Director 12 January 2016 n/a None Mark Hierons Director 12 January 2016 n/a None Adrian Michael Murphy Director 12 January 2016 n/a None Current shareholding Ernst & Young 22

31 Appendix A: Statutory Information Appendix B Directors' statements of affairs HS Realisations Limited Ernst & Young 23

32 Appendix B: Directors Statement of Affairs Ernst & Young 24

33 Appendix B: Directors Statement of Affairs Ernst & Young 25

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47 Appendix B: Directors Statement of Affairs Hewden Properties Limited Ernst & Young 39

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55 Appendix B: Directors Statement of Affairs Woodster Realisations Limited Ernst & Young 47

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