More than 100 unsecured creditors owed money by International firm King & Wood Malleson's former European arm are set receive nothing. An administrator’s report prepared by insolvency specialist Quantuma, filed with Companies House this week, reveals that 121 parties have come forward with claims amounting to more than £13m.
But the report states it is ‘currently unlikely’ that a distribution will be paid to unsecured creditors due to claims from preferential creditors.
It is also disclosed that Barclays holds a secured charge dated December 2016 which is valued at £16.6m. To date, a total of £4.47m has been paid through three dividends.
KWM’s European division, now called QSP Residual Recoveries LLP, went into administration in January to become the biggest UK law firm collapse to date. At the time of appointing administrators, it had around 5,000 clients and 12,000 live matters.
The report, covering the first six months of the administration, confirms that payments to staff have come to £292,824, and it notes that staff cooperation was ‘key to ensuring a smooth handover of case files to new law firms’.
Legal fees have so far come to around £1.25m. A total of £826,740 has been paid to international firm CMS Cameron McKenna for ‘assistance in attending to the complex legal issues which have arisen both in the pre- and post-administration periods’.
A further £186,318 has been paid to international firm Pinsent Masons for help in drafting documents, while national firm Ashfords has been paid £276,538 for assistance in acting as solicitor manager for the firm.
Other payments include £27,392 for mobile phone use during the administration, £87,310 to cover secure storage and shredding costs and £466,955 for the construction of a new server for holding a working copy of the firm’s electronic files and accounting system. A total of £4,000 was paid to experts to value artwork displayed through the firm's premises.
Joint administrators’ fees totalling £953,310 have been drawn so far.
A number of the firm’s assets were sold to KWM Europe LLP on 18 January: an initial consideration of £75,000 was received upon completion and four instalments of almost £300,000 each were due until January 2019.
Various other firms have paid for work in progress, including Baker McKenzie (£103,603), DLA Piper (around £900,000 so far, with £521,000 due this month) and Greenberg Traurig (around £1m to date).
KWM Europe’s assets ahead of its demise in January totalled at least £37m, almost wholly made up of work in progress and accounts receivable.
The administration report confirms that an investigation into the conduct of the firm’s designated members has been completed and a confidential report submitted to the Insolvency Service in April.
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