Carvill Group Limited (in administration)

Transcription

1 Joint administrators progress report from 20 May 2017 to 19 November 2017 Carvill Group Limited (in administration) 15 December 2017 High Court of Justice in Northern Ireland, Chancery Division Case no of 2011

2 Contents Abbreviations and definitions 2 Key messages 3 Overview of what we ve done to date 5 Progress since we last reported 6 Appendix A: Receipts and payments 8 Appendix B: Remuneration update 10 Appendix C: Other information 16 Carvill Group Limited PwC Contents

3 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 firm Meaning Carvill Group Limited in administration Stephen Cave and Toby Underwood PricewaterhouseCoopers LLP IR91 Insolvency Rules (Northern Ireland) 1991 Promontoria Cerberus Promontoria Ram Limited Cerberus European Capital Advisors LLP IO89 Insolvency (Northern Ireland) Order 1989 Sch.B1 IO89 Schedule B1 to the Insolvency (Northern Ireland) Order 1989 HMRC prescribed part secured creditors preferential creditors RPS unsecured creditors HM Revenue & Customs The amount set aside for unsecured creditors from floating charge funds in accordance with section 150A IO89 and the Insolvency (Northern Ireland) Order 1989 (Prescribed Part) Order (Northern Ireland) 2006 Creditors with security in respect of their debt, in accordance with section 248 IA86 Claims for unpaid wages earned in the four months before the insolvency up to 800, holiday pay and unpaid pension contributions in certain circumstances Redundancy Payments Service, an executive agency sponsored by the Department for Business, Energy & Industrial Strategy, which authorises and pays the statutory claims of employees of insolvent companies under the Employment Rights (Northern Ireland) Order 1996 Creditors who are neither secured nor preferential 2

4 Key messages Why we ve sent you this report I m writing to update you on the progress of the administration of the Company in the six months since our last report dated 15 June You can still view our earlier reports on our website at Creditors will be aware that the Court agreed to extend the duration of the administration until 19 May 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 Uncertain Uncertain Preferential creditors Unsecured creditors nil nil *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. Secured Creditors The Company was primarily financed by Northern Bank (t/a Danske Bank) and Ulster Bank with secured lending of c. 83m outstanding at the date of administration. This lending is secured by way of fixed and floating charges over all of the Company s assets. There are also cross company guarantees in operation across the wider Carvill Group. The majority of the assets over which Danske Bank held fixed charges have now been realised and Danske Bank will suffer a significant shortfall on its lending. The level of recovery for Danske Bank will be dependent on the level of funds achieved when the remaining floating charge assets are realised. To date, the value of distributions made to Danske Bank total 2,350,064 under its fixed charge, and 100,000 under its floating charge. In the administration, Ulster Bank sold the economic interest in its secured debt to Promontoria, an entity affiliated with Cerberus. As disclosed in our last report, the Promontoria debt was then sold to Swinford (Sirocco) Limited. Therefore the ultimate level of recovery for the new owner will be dependent on the realisable value of the remaining fixed charge asset, known as the Sirocco Quay site, however there is expected to be a significant shortfall. A total of 3,902,360 has previously been distributed under Ulster Banks security. In summary, the secured creditors will suffer a significant shortfall on their lending to the Company. Preferential creditors Preferential claims totalling 14, were paid in full on 5 July This included an amount to the secured creditors through their subrogated claim for pre-administration wages paid. 3

5 Unsecured creditors We understand the Company s unsecured creditors total 2.4m. As previously reported, due to the level of realisations expected for the remaining assets and the level of secured debt, there will be no distribution to unsecured creditors. The Prescribed Part is not applicable in this case as Danske Bank s floating charge pre-dates the coming into force of the Insolvency (Northern Ireland) Order 1989 (Prescribed Part) Order (Northern Ireland) What you need to do This report is for your information and you don t need to do anything. 4

6 Overview of what we ve done to date As explained in our previous reports, we will continue to realise the remaining assets of the Company. The Joint Administrators remain in office to realise the Company s assets and to distribute any surplus funds to the secured creditors of the Company. When we last reported, the key outstanding matters in the administration were as follows: the completion of the sale of the leasehold interest in a number of car parking spaces and apartments at the Embankment development was expected in July 2017; the ultimate realisation of the Sirocco Quay s site; the continued collection of the Company s ground rents portfolio; and ongoing discussions with the Carvill family regarding the expected distribution of funds to the Company in respect of intercompany balances due from two German group entities. 5

7 Progress since we last reported Realisation of assets Fixed charge assets Embankment Development As outlined in our last report, following an external marketing process, an offer to purchase the Company s leasehold interest in the Embankment Development site (also known as Annadale), together with a number of car parking spaces owned by the Company, had been accepted. This sale concluded in September 2017 and gross sale proceeds of 140,000 were received. Sirocco Quays, Belfast As previously advised security over this asset is now held by Swinford (Sirocco) Limited. During the period the Administrators have met with Swinford (Sirocco) Limited on a number of occasions to discuss the most appropriate strategy for realising value in the site. These discussions are ongoing and in the meantime the Administrators continue to manage the site, regularly implementing a vegetation clearance program, in conjunction with an environment assessment previously carried out. Discussions are ongoing with a local advertisement company and a proposal has been sought to capture future advertising revenue potential. Floating charge assets Ground rents In the period we have continued to collect ground rents due to the Company on a quarterly basis. A total of 4,709 has been collected in the period. Following the sale of the Embankment leasehold interest in September 2017 (disclosed above) no further ground rent income will be received. Inter-company balances As previously advised, the Company is owed a significant debt by two German subsidiaries. The companies are insolvent and the directors have now initiated liquidation processes over both entities. It is estimated that a dividend will be forthcoming to creditors of the German entities, including the Company, however this will be dependent on the outcome of the liquidations and resolution of a number of outstanding tax matters. The timing for the distribution is not certain at present. Investigations and actions We have undertaken a review of the Company s affairs for the period leading up to the Administration and have fulfilled our reporting obligations in compliance with their obligations under the Company Directors Disqualifications (Northern Ireland) Order 2002 and the Statement of Insolvency Practice No.2. No matters have come to light to suggest that further investigation work is necessary. 6

8 Our receipts and payments account We set out in Appendix A an account of our receipts and payments in the administration from 20 May 2017 to 19 November Our fees We have set out in Appendix C an update on our remuneration which covers our fees, disbursements and other related matters in this case. Creditors rights Any request for further information about the Administrators remuneration or disbursements should be made in writing. In addition, should you consider the Administrators remuneration excessive and this is supported by 25% in value of the creditors, you have the right to challenge the amounts in accordance with Rule of IR91. This information can also be found in Appendix 3 of the Remuneration of Insolvency Office Holders (Northern Ireland at: You can also get a copy free of charge by telephoning Lee Panther on Next steps We expect to send our next report to creditors at the end of the administration or in about six months, whichever is the sooner. If you ve got any questions, please get in touch with Lee Panther on Yours faithfully For and on behalf of the Company Stephen Cave Joint administrator Stephen Cave and Toby Underwood have been appointed as joint administrators of Carvill Group Limited to manage its affairs, business and property as its agents without personal liability. Stephen Cave is licensed to act as an Insolvency Practitioner in the United Kingdom. The license is granted in Ireland by Chartered Accountants Ireland. Toby Underwood is 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. 7

9 Appendix A: Receipts and payments Fixed Charge Receipts (fixed) Brought forward at 19 May 2017 From 20 May 2017 to 19 Nov 2017 Total Funding from chargeholder (fixed) 861, , , Insurance claims 10, , Sale of property Annadale (fixed charge) 2,439, , ,579, Sale of property - Colinglenn Road 27, , Sale of property - Comber Road 435, , Sale of property - Heath Lodge 20, , Sale of property - Levaghery Road 12, , Sale of Property - Lyndhurst View Park 30, , Sale of property - Utility Street/ Eureka Drive (fixed charge) 115, , Sale of property Sirocco Quays Sale of property - Woodbrook (fixed charge) 175, , Sale of property Woodbrook* 3,728, ,728, ,855, , ,022, Payments (fixed) Advertising (3,098.30) - (3,098.30) Agents fees (35,582.03) (3,535.00) (39,117.03) Annadale - retention paid back to purchaser (43,479.00) - (43,479.00) Cleaning & site clearance (1,265.00) - (1,265.00) Distribution to chargeholder (Danske Bank) (2,350,064.00) - (2,350,064.00) Distribution to chargeholder (Ulster Bank / Promontoria)* (3,852,643.47) (49,716.40) (3,902,359.87) Employee Related costs (Wages, PAYE, NIC, expenses) (252,880.63) - (252,880.63) Heat, Light and Power (40,006.65) - (40,006.65) Insurance (70,322.16) - (70,322.16) IT Costs (7,420.32) - (7,420.32) Lease/ hire & storage charges (26,329.83) - (26,329.83) Legal fees & disbursements (126,322.98) (3,746.50) (130,069.48) Motor expenses (3,585.86) - (3,585.86) Office Holder's Fees (310,000.00) (41,903.00) (351,903.00) Professional Fees - Annadale (3,788.77) - (3,788.77) Professional fees - other (19,383.08) - (19,383.08) Professional Fees - Sirocco (408,376.47) - (408,376.47) Professional Fees Woodbrook* (178,152.94) - (178,152.94) Repairs and maintenance (5,314.02) - (5,314.02) Service Charges (93,309.32) - (93,309.32) Subcontractors (38,307.10) - (38,307.10) Telephone and Fax (12,007.03) - (12,007.03) (7,881,638,96) (98,900.90) (7,980,539.86) Net fixed charge realisations (26,231.47) 68, ,

10 Floating Charge Receipts (floating) Brought forward at 19 May 2017 From 20 May 2017 to 19 Nov 2017 Book debts Ground rents collected 95, , , Equity share buy-out 25, , Holiday pay contribution from Construction First 2, , Interest received gross Refunds 18, , Sale of motor vehicles 18, , Sale of plant & machinery 168, , Third party funds 1, , Total 330, , , Payments (floating) Bank Charges (8,799.32) (84.05) (8,883.37) Distribution to chargeholder (Danske Bank) (100,000.00) (100,000.00) Legal fees & disbursements (2,116.00) (8,567.00) (10,683.00) Office Holder's Fees (65,000.00) (1,800.00) (66,800.00) Postage, Stationary and Printing (226.05) - (226.05) Rent paid (18,402.74) (336.58) (18,739.32) Corporation Tax Penalty - (100.00) (100.00) (194,544.11) (10,887.63) (205,431.74) Net floating charge realisations 136, (6,154.66) 130, VAT Control Account* 4, (8,580.60) (4,152.32) Irrecoverable VAT - (1,607.00) (1,607.00) Preferential distribution (100p in the ) (14,438.82) - (14,438.82) Total Balance at Bank 100, , , Note: The breakdown of the Woodbrook sale, previously shown separately, has now been included in the figures above. Those figures affected have been marked with an asterisk. 9

11 Appendix B: Remuneration update Our fees were approved on a time costs basis, limited to agreed caps at various stages, by the secured creditors in respect of fixed charge assets, and secured and preferential creditors in respect of the floating charge assets. To 19 November 2017 we have drawn fees on account of 351,903 and 66,800 in line with the approval given, as shown on the enclosed receipts and payments accounts. The time cost charges incurred the period covered by this report are 32, This amount does not necessarily reflect how much we will eventually draw as fees for this period. Total incurred time costs will not be recovered in full. We set out later in this Appendix details of our work to date, anticipated future work, disbursements, subcontracted work and payments to associates. Our time charging policy and hourly rates We and our team charge our time for the work we need to do in the administration. We delegate tasks to suitable grades of staff, taking into account their experience and any specialist knowledge that is needed and we supervise them properly to maximise the cost effectiveness of the work done. Anything complex or important matters of exceptional responsibility are handled by our senior staff or the joint administrators. All of our staff who work on the administration (including our cashiers, support and secretarial staff) charge time directly to the case and are included in any analysis of time charged. Each grade of staff has an hourly charge out rate which is reviewed from time to time. Work carried out by our cashiers, support and secretarial staff is charged for separately and isn t included in the hourly rates charged by partners or other staff members. Time is charged in six minute units. The minimum time chargeable is three minutes (i.e units). We don t charge general or overhead costs. We set out below the maximum charge-out rates per hour for the grades of our staff who already or who are likely to work on the administration. We call on colleagues in our Tax, VAT, Real Estate and Pensions departments where we need their expert advice. Their specialist charge-out rates vary but the following are the maximum rates by grade per hour. Grade Insolvency Staff Specialist Staff Maximum charge out Up to 30 June 2017 ( ) From 1 July 2017 ( ) rates ( ) Partner ,315 Director ,250 Senior manager ,230 Manager Senior associate qualified Senior associate unqualified n/a Associate Support staff In common with many professional firms, our scale rates may rise to cover annual inflationary cost increases. Payments to associates We have paid nothing to associates in the period covered by this report. 10

12 Our hours and average rates Aspect of assignment Partner (Hrs) Director (Hrs) Senior Manager (Hrs) Manager (Hrs) Senior Associate (Hrs) Associate (Hrs) Support (Hrs) Total (Hrs) Time cost Average hourly rate 1 Accounting and treasury , Creditors Property , Statutory and compliance , Strategy and planning , Tax , VAT Total for the period , Brought forward at 19 May , Total 1, ,

13 Our work in the period Whilst this is not an exhaustive list, in the following table we provide more detail on the key areas of work: - Area of work Work undertaken Why the work was necessary Accounting & treasury Management of funds held; Processing of receipts and payments; Undertaking bank reconciliations; and Dealing with charge-holder funding receipts and reconciling receipts and payments with the correct chargeholder. To enable the effective management of the Company s estates bank account. To ensure we are in accordance with statutory and regulatory requirements to keep proper accounting records To ensure proper stewardship of the Company s money. Creditors Responding to creditor enquiries. For the proper administration of the insolvency. Property Ongoing collection of ground rent; Completion of the sale of leasehold interest held at the Embankment Development; Exploring options for realisation of Sirocco Quays; Completing estimated outcome statements; and Maintaining the Company s property assets- utilities, subcontractors and maintenance. Statutory & compliance Completing and distributing progress reports; Companies House filings; and Filing of ongoing case work. Strategy and Planning Case management; Team strategy meetings; and Review of case by appointment taker To maintain and secure the Company s assets. To maximise receipts into the insolvency estate. To enable future planning of the case and to provide the secured creditor with updates regarding their likely recovery. To fulfil the Company s statutory obligations. To maintain records in accordance with regulatory guidelines and best practise. To facilitate the successful management of the case and the on-going realisation of assets. Periodic reviews by appointment takers as required by the administrators regulatory body. Tax Preparation and submission of the Company s tax return We are proper officers of the Company for tax and VAT purposes and must ensure returns are submitted and compliance matters adhered to under UK statutory regime. To ensure full recovery of VAT receivable for the benefit of creditors. 12

14 Our future work We still need to do the following work to achieve the purpose of administration. Area of work Work we need to do Why the work is necessary Accounting and treasury The on-going management of Company s banking facilities; and On-going payments and receipts. Closure Filing notice of dissolution at Companies House; and Obtaining tax and VAT clearances from Her Majesty s Revenue and Customs. Creditors Responding to creditor queries; and On-going liaison with the secured creditors. Property and other assets Agreeing a strategy for the realisation of Sirocco Quays; Insuring and preserving the remaining property assets; and The potential recovery from the inter-company debt. Statutory and compliance Completion and distribution of six monthly progress report; and Filing the necessary notices at Companies House; Completing Companies House filings; Maintaining internal job management systems; and Dealing with postal correspondence received. Strategy and Planning Periodic reviews of case by appointment takers; and Team strategy meetings. Tax and VAT Continuing submission of VAT returns; and Continuing submission of corporation tax returns. To enable the effective management of the Company s estates bank account. To comply with statutory obligations. To enable a timely, effective and efficient end to the administration. For the proper administration of the insolvency. To maintain and secure the Company s assets. To maximise receipts into the insolvency estate. To comply with our obligations under insolvency legislation to prepare and circulate progress reports to creditors and Companies House. To comply with statutory duties placed on the Administrators. To provide creditors with an update of the administration. To ensure the proper administration of the insolvency. To keep appropriate records and filing systems. To control efficiencies, time costs and ensures continued case progression Regulatory requirement for the purpose of ensuring adequate progression and supervision of the case. We are proper officers of the Company for tax and VAT purposes and must ensure returns are submitted and compliance matters adhered to under UK statutory regime. To ensure full recovery of VAT receivable for the benefit of creditors. 13

15 Disbursements We don t need to get approval to draw expenses or disbursements unless they are for shared or allocated services provided by our own firm, including room hire, document storage, photocopying, communication facilities. These types of expenses are called Category 2 disbursements and they must be directly incurred on the case, subject to a reasonable method of calculation and allocation and approved by the same party who approves our fees. Our expenses policy allows for all properly incurred expenses to be recharged to the administration and has been approved by the secured and preferential creditors where required. The following disbursements arose in the period of this report. Category Policy Photocopying - at 3 pence per sheet copied, only charged for circulars to creditors and other bulk copying. Mileage - At a maximum of 63 pence per mile (up to 2,000cc) or 81 pence per mile (over 2,000cc) All other disbursements reimbursed at cost: Archiving Postage Extra resourcing Costs incurred nil nil Total 857 During the period of this administration we were assisted by colleagues from another PwC office to assist the team. 111 relates to disbursements incurred during their time on the case. Our relationships We have no business or personal relationships with the parties who approve our fees or who provide services to the administration where the relationship could give rise to a conflict of interest. Details of subcontracted work No work has been subcontracted in the period. 14

16 Legal and other professional firms We ve instructed the following professionals on this case: Service provided Name of firm / organisation Reason selected Basis of fees Paid in the period Legal services Lisney LLP Knowledge / Expertise Fixed 3, Legal services Arthur Cox Solicitors Knowledge / Expertise Fixed 6, Legal services Terence McCourt Knowledge / Expertise Time costs 6, All professionals have their invoices reviewed before payment. 15

17 Appendix C: Other information Court details for the administration: Company s registered name: Trading name: Registered number: Registered address: Date of the joint administrators appointment: Joint administrators names and addresses: Extensions to the initial period of appointment: Appointor s / applicant s name and address: Split of the joint administrators responsibilities: The European Regulation on Insolvency Proceedings (Council Regulation (EC) no 1346/2000 of 29 May 2000) Proposed end of the administration High Court of Justice, Northern Ireland Chancery Division, 8003 of 2011 Carvill Group Limited n/a NI Waterfront Plaza, 8 Laganbank Road, Belfast, BT1 3LR 20 May 2011 Stephen Cave of PwC LLP, Waterfront Plaza, 8 Laganbank Road, Belfast, BT1 3LR (appointed 27 June 2013); and Toby Underwood of PwC LLP, Central Square, 29 Wellington Street, Leeds, LS1 4DL Paul Rooney acted as joint administrator from 20 May 2011 to 27 June 2013 A 6 month extension to 19 November 2012 was granted by the secured and preferential creditors and then 18 months to 18 May 2014 by the court. Subsequently the court granted two further 24 month extensions to 19 May 2016 and then 19 May 2018 The directors of the Company, c/o Derriaghy Industrial Estate, Dunmurry The joint administrators shall be entitled to exercise all of their functions as such administrators jointly and severally, so that all functions may be exercised by any or all of the joint administrators. The European Regulation on Insolvency Proceedings applied to this Administration and the proceedings are main proceedings. It is anticipated that there will be no dividend payable to unsecured creditors, the Administrators will file notice under Paragraph 85 Sch.B1 IO89 with the registrar of Companies, following registration of which the Company will be dissolved three months later. 16

18 Rule Form 2.24B The Insolvency (Northern Ireland) Order 1989 Administrator s progress report Name of Company Carvill Group Limited Company Number NI In the High Court of Justice in Northern Ireland Chancery Division (Company Insolvency) Court case number 8003 of 2011 (full name of court) (a) Insert full name(s) and address(es) of administrator(s) We (a) Stephen Cave of PricewaterhouseCoopers LLP, Waterfront Plaza, 8 Laganbank Road, Belfast, BT1 3LR and Toby Underwood of PricewaterhouseCoopers LLP, Central Square, 29 Wellington Street, Leeds, ls1 4DL administrators of the above company attach a progress report for the period from to (b) 20 May 2017 (b) 19 November 2017 (b) Insert dates Signed Joint Administrator Dated 15 December 2017 x