www.pwc.co.uk/ukcoal Joint Liquidators annual report for the period 12 July 2016 toil July 2017 and final account I4AUquSt 2017 Ocanti Opco Limited (formerly UK Coal Operations Limited) (in Liquidation) pwc
www.pwc.co.uk/ukcoal Contents Abbreviations and definitions Key messages 3 What we ve done during the Liquidation 4 Outcome for creditors 6 Progress since we last reported 7 Appendix A: Receipts and payments 9 Appendix B: Expenses 10 Appendix C: Remuneration update 11 Appendix I): Other information is Ocanti Opco Limited (formerly UK Coal Operations Limited) PwC Contents
Abbreviations and definitions The following table shows the abbreviations and insolvency tenms that may he used in this report: Abbreviation or definition Company Liquidators we our firm Meaning Ocanti Opco Limited (formerly UK Coal Operations Limited) Robert James Hebenton, David James Kelly and Ian David Green PricewaterhouseCoopers LLP IR;6 Insolvency (England and Wales) Rules 2016 1A86 Insolvency Act 1986 DECC PPF prescribed part secured creditors preferential creditors RPS unsecured creditors Department of Business, Energy & Industrial Strategy (formerly Department of Energy and Climate Change) Pension Protection Fund The amount set aside for unsecured creditors from floating charge funds in accordance with Section 176A 1A86 and the Insolvency Act 1986 (Prescribed Part) Order 2003 Creditors with security in respect of their debt, in accordance with Section 248 1A86 Generally, claims for unpaid wages earned in the four months before the insolvency up to 8oo, holiday pay and unpaid pension contributions in certain circumstances Redundancy Payments Service, an executive agency sponsored by the Department for Business, Energy and Industrial Strategy, which authorises and pays the statutory claims of employees of insolvent companies under the Employment Rights Act 1996 Creditors who are neither secured nor preferential 2
Key messages Why we ve sent you this report We re writing to update you on the progress of the liquidation of the Company and to tell you that the Company s affairs are now fully wound up. Our report provides an update on matters since we last reported (for the period 12 July 2016 to 11 July 2017), and includes our final account of the liquidation, covering the period to 10 August 2017. You can still view our earlier reports on our website at www.pwc.co.uk/ukcoal How much creditors have received The following table summarises the outcome for creditors. Distributed Previous estimate Class of creditor (p in ) (p in ) Secured creditors N/A N/A Preferential creditors 100 Already paid in full Unsecured creditors 7.83 7.5 7.9 What you need to do This report is for your information and you don t need to do anything. The enclosed Notice of Final Report gives details of creditors rights in relation to requesting further information, challenging the Liquidators remuneration and expenses and objecting to the Liquidators release from liability. More information in relation to creditors rights can also be found in the guide below: creditorfeequide6april2017.ashx?la =en You can also get a copy free of charge by telephoning James Moran on 0113 289 4067. 3
What we ve done during the Liquidation On q July 2013 we were appomted iomt administrators of the Qompanv. The administration ended on i July 20 13, when the Company went into creditors voluntary liquidation and we were appointed as Liquidators. At the end of the previous administration the key outstanding matters were as follows: Dealing with any residual retention of title claims Dealing with the Daw Mill Colliery Realising rates refunds Claims agreement Distributions to preferential & unsecured creditors The following is a brief summary of how we ve dealt with each of these matters in the liquidation. Later in this report we focus specifically on what has been done since we previously reported to creditors. Since our appointment as Liquidators, we have dealt with the following matters: As stated in previous reports the business and assets of the Company were sold in the previous administration realising some 15,000,000. Details of the sale can be found in the former joint administrators final report dated 17 July 2013. following our appointment 15,000,000 was transferred to the liquidation. Retention of title As stated in previous reports, following the sale of the Company s business and assets in the previous administration, 500,000 was held on trust for a period of time to be used in certain circumstances in respect of retention of title claims. In January 2014 these monies plus accrued interest were returned to the purchaser of the business. Daw Mifi Colliery At the date of the liquidation, the Company s only tangible asset was the Daw Mill Colliery, which was subject to a catastrophic fire in February 2013. As detailed in previous reports, immediately following our appointment on 12 July 2013 the colliery was disclaimed with the consent of The Coal Authority, as an onerous asset, in order to maximise unsecured creditor realisations. Rates refunds following a review of rates payments made in respect of Daw Mill Colliery, a rates refund of 154,293 has been secured. Preferential creditors Preferential creditors were paid ioop in the pound in November 2013 and catch up dividends were made in November 2014 in respect of pension contributions not previously claimed and in June 2017 in respect of a final employee claim. 4
Unsecured creditor claims agreement Interest Concessionary fuel following our appointment one of the major classes of unsecured creditors was in respect of concessio.naiy fuel benefits to former mmci s. We instructed JLT Speciality Limited to assist in valuin the level of potential claims. We also uflilsed the services of specialists within our finn to model this contingent claim and following discussions with the DECC a level of claim was agreed and subsequently admitted at 6,685,000. Intercompany Claims As detailed in the directors statement of affairs, there were a number of claims submitted by group companies. Many of these companies were in insolvency processes of their own. These claims were reviewed and following liaison with the various insolvency practitioners these claims were agreed. Part of Juniper No 3 Limited s intercompany claim was made up of its admitted unsecured creditor claims. As such, an exercise was undertaken to review Juniper No 3 Limited s unsecured creditor claims. The total level of admitted intercompany claims was 85,486,026.01. As detailed in previous reports, loans totalling some 450,000 have been made to group companies. These loans have been repaid from the unsecured creditor distributions made to the respective parties in the period 12 July 2016 to 11 July 2017. Other unsecured claims The directors statement of affairs detailed other unsecured creditors (i.e excluding the above claims) at 108,688,294. As part of the sale of business the purchaser agreed to settle certain creditor claims up to 15 million and as such an exercise has been undertaken to ensure creditors have not been settled by the purchaser. Claims adjudication has been completed and the total final level of these admitted claims was 74,276,107. Interest totalling 136,154 has been received since our appointment as Liquidators. 5
preferential Outcomefor creditors Secured creditors At the time of our appointment there were no secured creditors. Preferential creditors (mainly employees) In their statement of affairs, the directors estimated that preferential claims would total around 459,191. The final level of admitted preferential claims was 607,662. We have paid preferential creditors loop in the. Unsecured creditors Dividends become available for unsecured creditors when there are sufficient funds (after costs of the liquidation) to pay the secured and preferential creditors in full, with an amount left over. In certain circumstances, part of the amount available for secured creditors may be ringfenced for the benefit of unsecured creditors. This prescribed part is paid out of net property, which is floating charge realisations after costs, and after paying or setting aside enough to pay creditors in full. But it only has to be made available where the floating charge was created on or after 15 September 2003. In this case the prescribed part doesn t apply because there is no floating charge registered against the Company. We previously reported that as part of the sale of the Company s business and assets, the purchaser created new loan and debt liabilities to the PPF, leaving the PPF with a residual claim against the Company of 37.7million. It was agreed that only after other unsecured creditors received a return of 7.15% woulä the PPF s claim rank for dividend purposes. Until that time the PPf s claim would be postponed. Once both unsecured creditors and the PPF had received 7.15% all creditors would rank equally. We paid a dividend of 7.83% to the unsecured creditors in September 2016. This dividend was paid equally to both unsecured creditors and the PPF in accordance with the above. A total of 13,047,291 was distributed to unsecured creditors whose claims were admitted for dividend purposes. 6
Progress since we last reported creditors In the period 12 Juh 2016 to ii July 2017 we have finalised the claims adjudication process and paid our first and final dividend to unsecured creditors as previously stated. Following the payment of this dividend we have liaised with several creditors regarding unbanked cheques with a view to ensuring the cheques are banked. following this exercise a balance of unbanked cheques was paid over to the Insolvency Service in June 2017. Connected party transactions There have been no connected party transactions. Statutory and compliance In the period 12 July 2016 to 11 July we have held strategy meetings and appointment taker reviews throughout, and completed our third progress report. In the period 12 July 2017 to date we have prepared our fourth progress report and final account and implemented our closure strategy. Investigations and actions Nothing has come to our attention during the period under review to suggest that we need to do any more work in line with our duties under the Company Directors Disqualification Act 1986 and Statement of Insolvency Practice No.2. Our receipts and payments account We set out in Appendix A accounts of our receipts and payments in the liquidation from 12 July 2016 to ii July 2017, 12 July 2017 to 10 August 2017 and for the liquidation in total. Our expenses We set out in Appendix B a statement of the expenses we ve incurred in the periods since our last report and since our appointment. Ourfees We set out in Appendix C an update on our remuneration which covers our fees, disbursements and other related. matters in this case. What we still need to do The winding up of the Company is now complete. Following the end of the period within which creditors may object to our release, we will send a copy of this final account to the Registrar of Companies with a statement of whether any creditors of the Company objected. We will vacate office on sending the copy report and statement. S 7
If you ve got any questions, please get in touch with James Moran, on 0113 289 4067. Yours faithfully for and on behalf of the. Company dkellv Joint liquidator Robert Hebenton, Ian Green and David Kelly have been appointed asjoint Liquidators of Ocanto Opco Limited. All are licensed in the United Kingdom to act as Insolvency Practitioners by the Institute of Chartered Accountants in England and Wales. Thejoint Liquidators are bound by the Insolvency Code ofethics which can befound at: https://www.gov. uk/government/pubtications/insotvencypractitionercodeofethics. Thejoint Liquidators are Data Controllers ofpersonal data as defined by the Data Protection Act 1998. PricewaterhouseCoopers LLP will act as Data Processor on their instructions. Personal data will be kept secure and processed onlyfor matters relating to the Liquidation. 8
Appendix A: Receipts and payments Receipts Total for thepod 12 July 2013 to 11 July 20 16 () Total for the peud 12 July 2016 to 11 July 2017 () Total for the pesiod 12 July 2017 to 10 August 2017 (E) Total for the period 12 July 2013 to 10 August 2017 () Release of funds from Administrators Funds for retention of title payments Daw Mill rates refunds Interest received gross Interest received in respect of retention of title payment monies 15,000,000.00 500,000.00 154,293.16 136,153.85 1,213.55 15,000,000.00 500,000.00 154,293.16 136,153.85 1,213.55 1,7Q1,66O.56 1S,791.660.56 Payments Bank charges Insurance Legal fees Corporation tax Loan to group company Postage & stationery & printing Prior appointee fees & expenses Professional fees Return of funds for retention of title payments Room hire and meeting costs Agents fees Security Legal Settlement Liquidators fees (time cost basis) Liquidators disbursements Statutory advertising Storage costs (218.25) (10,600.00) (170,642.50) (26,583.58) (450,000.00) (164.93) (203,639.62) (44,7.oo) (501,213.55) (903.70) (38,573.29) (6,396.60) (6,o.o) (900,000.00) (13,986.26) (1,725.24) (2,374,972.02) (298.25) 450,000.00 (1,018.23) (6.93) 448.676.SQ (210,376.40) (696.70) f2rr.o7it.io) (516.50) (10,600.00) (170,642.50) (26,583.58) (164.93) (203,639.62) (44,247.00) (501,213.55) (903.70) (38,573.29) (6,396.60) (6,o.5o) (1,110,376.40) (14,682.96) (2,743.47) (6.93) VAT control account (6.20) (205.03) 211.23 Preferential creditors distribution of ioop in the see body of report for timings of payment (603,996.48) (3,665.26) (607,661.74) Unsecured creditors distribution 7.83p in the see body of report for timing of payment (13,047,291.47) (13,047,291.47) Returned dividend due to withdrawn claim 661.18 661.18 Balance held in noninterest bearing aeeoirnt 12,812,685.86 (12,601,823.99) (210,861.87) 9
6.93 Appendix B: Expenses The following table provides details of our expenses. Expenses are arniunts properly payable by us as Liquidators from the estate and includes OUT fees, but excludes distributions to creditors. The table should be read in conjunction with the receipts and payments accounts at Appendix A, which shows expenses actuaily paid during the period and the total paid to date. Period 12 July 2016 ii July 2017 Unpaid expenses brought Incurred in the Expenses paid in the Unpaid expenses forward period period 12 July 2016 as at from preceding period 12 July 2016 toll July 2017 toll July 2017 ii July 2017 Liquidators fees 122,986.58* 142,981.28 265,967.86 Liquidators expenses 617.56* 79.14 696.70 Legal fees Statutory advertising 948.01 70.22 1,018.23 Storage 6.93 Total 124,552.15 143,137.57 1,025.16 266,664.56 Period 12 July 2017 10 August 2017 Unpaid expenses brought Incurred in the Expenses paid in the Unpaid expenses forward period period 12 July 2017 as at from preceding period 12 July 2017 to 10 August 2017 to 10 August 2017 10 August 2017 Liquidators fees 265,967.86 4,449.60 210,376.40 60,041.06 Liquidators expenses 696.70 696.70 Legalfees Statutory advertising Storage Total 266,664.56 4,449.60 211,073.10 60,041.06 *please note these figures were underreported in our previous report dated 16 August 2016. 10
Appendix C: Remuneration update Following the end of the previous administration a meeting of creditors was held oris August 201,3. At that meeting creditors fixed the basis of former administrators fees by reference to time properly given by the former administrators and their staff in dealing with the administration. The fee basis agreed for the previous administration continues to apply in the liquidation. This means that our fees as Liquidators will be calculated by reference to time properly given by the Liquidators and their staff in dealing with the Liquidation. From 12 July 2016 to 11 July 2017, we have incurred time costs of 142,981. This represents for 565 hours at an average hourly rate of 253. From 12 July 2017 to 10 August 2017, we have incurred time costs of 4,450. This represents for 24 hours at an average hourly rate of 189. This brings time costs from appointment to 10 August 2017 to 1,170,417 representing 4,212 hours at an average hourly rate of 278. To date we have drawn 1,110,376 against all time costs. No further fees will be drawn. We set out later in this Appendix details of our work, disbursements, subcontracted work and payments to associates. 11
1.00 040 0.25 1.55 140 3.90 4.00 0.20 lime cost 7,783.63 146.75 92,931.40 12,253.75 17,241.00 Avi age hourly rate 371.53 326.11 256.53 200.22 252.99 343.03 343.45 224.78 Cumulative totals 84,763.08 755.00 38,27440 5.52400 481,575.95 65,388.55 152,952.65 48,479tO 205,508,48 57,404.75 14,135.25 12 Our hours and average rates Analysis of time costs for the period from 12 Jul 2016 toll Jul 2017 Senior Senior Aspect of assignment Partner Director Manager Manager Associate Associate Secretarial Total hours Strategv&Planning 0.20 7.00 1.50 7.10 4.25 0.90 20.95 Trading Assets 0.45 Investigations Creditors 16.45 103.35 183.25 55.91 2.30 362.26 Accounting and treasluy o.8 42.20 17.75 61.20 Slatutotyandcompliance 3.50 11.20 47.50 440 68.15 Tax &VAT 0.90 0.25 3.58 Employees& pensions 0.45 4.35 1,217.75 1,494.00 Concessionary fuel benefit Closure precedures 0.50 0.55 1540 23.65 4410 9,913.00 tnformation and technology 11,205.25 ITO Ifortheperiod 4.20 8.00 2415 129.35 294.15 101.96 3.201 Brought forward at 11 Jul 2016 ITo I 565.011 I 142,9$1.2j I 1,165.067.46J I 3,622.921 I 1,022,986j 4,187.93 1,165,967.4j Please note that total time costs were reported incorrectly in our previous progress report. The brought forward total is therefore lower than has previously bren reported.
ITof0rthepocl I 0.50 1.80 20.80 0.501 I 2 Senior Senior Aspect of assignment Partner Director Manager Manager Associate Associate Secretarial Total hours lime cost 11 Average hourly rate ii Cumulative totals Strategy & Planning 0.50 0.50 1.00 356.00 3.56.00 85,119.08 755.00 Assets 0.20 0.20 39.20 195.00 38.31360 Investigations 5,524.00 Creditors. 481.57595 Accounting and tseastuy t_ 1.45 1.95 373.35 191.46 65,759.90 Statuton and compliance. 030 150 1 80 Tax&VAT 3.80 3.80 342.90 190.50 153,295.55 665.00 115.00 49,144.10 Emplovees&pensions 4 $. Concessionary fuel benefit. 205,508.48 57,404.75 Closure procedures 0.80 14.05 1485 Information and technology 2,673.5 ltto.tjl 168o8.4o 11,205.25 23.60j I 4,449.60]54 [i,17o,4i Brought forward at ii Jul 2017 I 4,187.931 I 1,163,967.461 4,211.531 I 1,170,417.061 13 Analysis of time costs for the period from 12 Jul 2017 to 10 Aug 2017 Trading ITo I.... 0.50
Our time charging policy and hourly rates We and our team charge our time for the work we need to do in the liquidation. We delegate tasks to suitable grades of staff, taking into account their experience and any specialist imowledge that is needed and we supervise them properly to maximise the cost effectiveness of the work done. Anything complex or important matters of exceptional responsibility are handled by our senior staff or the Liquidators. All of our staff who work on the liquidation (including our cashiers, support and secretarial staff ) charge time directly to the case and are included in any analysis of time charged. Each grade of staff has an hourly charge out rate which is reviewed from time to time. For the avoidance of doubt, work carried out by our cashiers, support and secretarial staff is charged on a time costs basis and is included in the analysis of hourly rates charged by partners or other staff members. Time is charged in three minute units. The minimum time chargeable is three minutes (i.e. 0.05 units). We don t charge general or overhead costs. We set out below the maximum chargeout rates per hour for the grades of our staff who already or who are likely to work on the liquidation. Grade Maximum Maximum Maximum rate Specialist rate per hour rate per hour per hour maximum rate from From From per hour 1 July 2015 to 1 July 2016 to 1 July 2017 to 30 June 2016 30 June 2017 30 June 2018 t1) ( ) (f ) (1) Partner 590 6oo 620 1,250 Director 490 500 525 1,150 Senior Manager 425 435 450 970 Manager 340 345 355 700 Senior Associate 255 260 26$ 515 Associate 165 170 175 255 Support staff 87 89 92 150 In common with many professional firms, our scale rates may rise to cover annual inflationary cost increases. 14
Our work in the period since our last report Earlier in this section we have included analyses of the time spent by the various grades of staff for the periods 12 July 2016 to 11 July 2017 and 12 July 2017 to 10 August 2017. Whilst this is not an exhaustive list, in the following tables we provide more detail on the key areas ofwork for the penods 12 July 2016 to 11 July 2017 and 12 July 2017 to io August 2017: What, if any, financial benefit the work provided to creditors Why the work was OR whether it was Area of work Work undertaken necessary required by statute Strategy &planning Case progression To ensure orderly To ensure efficient meetings management and management of the case. Appointee reviews of progression of the case case progression. a Review ofcosts and budgets Assets Correspondence Determine zf any Maximise asset regarding rates refunds additional realisations reatisations Creditors Adjudicate on Necessary to ascertain Dividend paid to outstanding unsecured whether unsecured creditors claims creditors wilt receive a Calculating first and return, and the amount finat dividend ofany such return Completing all necessary pre dividend reviews and steps including sanction checking Declaring and paying a dividend to unsecured creditors of 7.83% Sending dividend cheques Dealing with uncashed dividend cheques Responding to correspondence and callsfrom creditors Accounting & treasury Processing receipts and Incidental to the Ensuring correct payments including management of the case management offunds payment of the To ensure management held unsecured dividend of the bank account is Dealing with unbanked up to date dividend cheques Paying unclaimed dividends to the 15
Statutory & compliance Insolvency Services Account Bank reconcihations Account closure Processing journols to ensure correct reflection ofpayments and VAT treatment Preparing and circulating third annual progress report Making requiredfilings at Companies House Maintaining casefiles and updating records Tax & VAT Finalise the Company s To compty with Required by statute tax position statutory obligations Maximise returns and minimise liabilitiesfor the benefit of creditors Employees &pensions Case closure Responding to employee Necessaryfor proper To ensure efficient calls regarding dividend case management management of the case payments Payment ofcatchup preferential dividend Liaising with advisors to ensure all matters finalised Agreeing closure strategy and timings Obtaining clearances from advisors in respect ofclosure of the liquidation To comply with statutory obligations Necessary for proper case closure Required by statute Required by statute Work earned out in the period 12 July 2017 to 10 August 2017 What, if any, financial benefit the work provided to creditors Why the work was OR whether it was Area of work Work undertaken necessary required by statute Strategy & planning Planning for case Necessary for proper Required by statute closure case closure Accounting & treasury Processing final To ensure management To ensure correct payments of the bank account is management offirnds Account closure up to date i6
File Tax & VAT Preparing final VAT To comply wit/i Required by statitte reclaim statutory obligations c tosure procedures Preparingfinal account To comply with Required by statute and accompanying statutory obllgatlons documents 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 liquidation and has been approved by creditors where required. The following disbursements arose between 12 July 2016 and ii July 2017. Costs incurred Category Policy 2 Photocopying at 5 pence per sheet copied, only charged for circulars to creditors and other bulk copying. 77. 2 Mileage At a maximum of 71 pence per mile (up to 2,000cc) or 93 pence per mile (over 2,000cc) 1 Storage storage costs 2.06 Total 79.14 We did not incur any disbursements between 12 July 2017 and 10 August 2017. Our relationships We have no business or personal relationships with the parties who approve our fees or who provide services to the Liquidation where the relationship could give rise to a conflict of interest. Legal and other professionalfirms We instructed the following professionals on this case: Service provided Name of firm / Reason selected Basis of fees organisation Legal services Addleshaw Relevant expertise Time cost basis Goddard LLP Concessionary fuel claim valuation JLT Speciality Relevant expertise fixedfee basis Limited Rating works for rates refunds Gerald Eve LLP Relevant expertise Percentage of realisations Our choice was based on the advisers experience, the complexity and type of work and the basis of the fee arrangement. We are satisfied that the fees charged are reasonable. 17
Appendix D: Other information Company s registered name: Trading name: Ocanti Opco Limited UK Coal Operations Limited Registered number: 08223192 Registered address: Central Square 8th Floor, 29 Wellington Street, Leeds, LS1 4DL Date of the Liquidators appointment: 12 July 2013 Liquidators names, addresses and contact details: Robert James Hebenton, David James Kelly and Ian David Green of PricewaterhouseCoopers LLP 7 More London Riverside, London, SE1 2RT Contact: James Moran on 0113 289 4067 i8
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