Insolvency and Administration

An Update on SVS Securities

On 5th August the FCA announced that broker SVS Securities had entered Special Administration. Once again, as in the case of Beaufort Securities, this is a situation that will cause great concern and, at a minimum, some inconvenience, for SVS clients. Whilst a firm is in special administration, clients are not able to trade securities held on their behalf, or access money held on their behalf, including dividend payments. It is disappointing that it has taken until 12th September for clients to receive ...

Grant Thornton, Interserve and Arc Fund Management

The Financial Reporting Council (FRC) have announced an investigation into the audits by Grant Thornton of the accounts of Interserve (IRV) in the years 2015-2017. Interserve was a large outsourcing company with most of its business from Government contracts. It ran out of cash and went into administration on the 15th March with debts of £738 million. Readers will no doubt be aware that Grant Thornton were also the auditors of Patisserie Holdings and Globo, both cases where very substantial fraud ...

Debenhams PrePack, Dunelm Trading, ASOS and Privacy

Department store operator Debenhams (DEB) has been put through a pre-pack administration. It’s been bought by a new company formed by its secured lenders. Mike Ashley of Sports Direct is furious. His company invested £150 million in the shares of the company in the hope of taking it over, which will now be worthless. He had some choice words to say on the subject which included that it was an “underhand plan to steal from shareholders”, “as normal politicians and regulators ...

Patisserie and Interserve Administrations, plus Brexit latest

Yesterday the administrators (KPMG) of Patisserie (CAKE) issued their initial report. It makes for grim reading. The hole in the accounts was much worse than previously thought with an overstatement of net assets of at least £94 million. That includes: Intangible assets overstated by £18m; Tangible assets overstated by £5m; Cash position overstated by £54m; Prepayments and debtors overstated by £7m; Creditors understated by £10m. The accounts were clearly a total fiction. It is uncertain whether there will even be sufficient assets ...

Interserve Administration: I am very angry!

I attended Interserve's General Meeting today and I am... ...angry with major shareholders, who didn't hold the board to account and couldn't be bothered to speak or vote today. ...angry with former board members who, in my opinion, did not properly exercise their corporate governance responsibilities. ...and angry with former executives who drove the Interserve ship onto the rocks... and were still well-rewarded. In short, a massive failure of corporate governance and corporate stewardship. Those responsible should hang their heads in shame. Government should consider ...

Inconvenient AGM at Phoenix, Changes to “Going Concern” and GoCompare

I have been advised that life insurance and pension consolidator Phoenix Group (PHNX), a FTSE 250 company, is holding this year’s AGM in Edinburgh at 9.00 am. That’s a damn inconvenient time and location for most investors. Previous general meetings have been held in London where their registered office is located, although I am told that only one director and no shareholders turned up for the 2018 AGM. This is the explanation given by the company for the latest venue in the ...

AssetCo Case and Grant Thornton Defense

I mentioned in a previous blog post yesterday the judgement in the case of the alleged breach of duty by Grant Thornton (GT) when acting as auditors of AssetCo Plc (ASTO) in 2009/10. See https://www.bailii.org/ew/cases/EWHC/Comm/2019/150.html for the full judgement. For those who have not had the opportunity to read all 300 pages of the judgement, here are some interesting points from it: It was conceded that the audit was negligent in a number of respects, but GT’s defense against the damages claim ...

Flybe, InterServe, Jackals, Vultures and BEIS progress on Insolvency Laws

Flybe is another example of the problems of the insolvency system not working very well. @LucyGJWhite explains it well in today's Daily Mail https://www.dailymail.co.uk/money/markets/article-6671393/Investor-anger-cut-price-Flybe-takeover.html which quotes me. It is shocking that the directors rejected a merger deal at 40p and now are recommending a 1p deal - they should be ashamed. The UK Shareholders Association/ShareSoc wrote a very good response to the BEIS Consultation on Insolvency and Corporate Governance https://www.gov.uk/government/consultations/insolvency-and-corporate-governance. Click here for our response https://www.sharesoc.org/wp-content/uploads/2018/06/BEIS-Consultation-on-Insolvency-and-corporate-Governance-joint-UKSA-ShareSoc-response1.pdf. We made the very important point: In the US, Chapter 11 ...

AssetCo, Patisserie, Stockpiling, Warehouses, Sheds, Brexit and Venezuela

A week ago, an award of damages of £21 million plus interest and costs was made against Grant Thornton for their breach of duty when acting as auditors of AssetCo Plc (ASTO) in 2009/10. See https://www.bailii.org/ew/cases/EWHC/Comm/2019/150.html for the full judgement. I understand Grant Thornton may appeal. These are the key sentences in the judgement: It is common ground that in those years the senior management team at AssetCo behaved in a way that was fundamentally dishonest. During the audit process management made ...

Patisserie – and How to Avoid Such Disasters

The events at Patisserie (CAKE) have been well covered in both the national media and financial press so I won’t repeat them here. This article will, therefore, concentrate on...