https://www.bbc.co.uk/news/business-66018076
One of the lessors to another fleet not too far from EGTK apparently is taking over the FTA fleet from the banks? I doubt this will help unsecured creditors to FTA.
In Denmark they are trying to do this differently.
There is some pressure for a regulatory change here in the UK. You cannot stop an FTO going bust (despite much wishful thinking, the CAA will never get involved in financial regulation like they do for the passenger bonds for airlines) but you can stop them disappearing with so much clients’ money. With FTA, reportedly a number of people (parents, mostly) lost over £80k.
But the FTOs use these prepayments to prop up their cash flow, so any form of escrow is of no use to them. One could have a law limiting the size of the prepayment relative to the total cost of the full course. But that is hard to put a precise number on that, which means there will be workarounds…
This (extracts) was published on a training industry rag re the Tayside FTO which went bust earlier in 2023
and this is so typical – the “admin” extracts the remains of the corpse
Old-timers in business will not find any of this surprising.
£515/hr is ludicrous.
I was paying £750/hr plus VAT to a top-level accountant in 1991. £515/hr is not a “street corner accountant” but is “quite cheap”.
These administrator vermin always line their pockets.
Since 1978, I have never seen unsecured creditors get as much as 1% payout.
It is sad, especially this not being widely known or used.
In the USA these fees have to be agreed in court, and they rank at the top of the unsecured creditors. Administration seems to lack the paraphernalia of US bankruptcy processes, but also seems to be somewhat open to informal practices with a whiff of small town rough justice about it.
Given the size and relative simplicity of this estate these fees seem disproportionate. In Chapter 9 (liquidation) they would be contested. The unsecured creditors’ committee in the USA would in effect be promoted to the governance of the process, as long as valid secured liens are respected. Here the unsecureds don’t appear to be marshalled into a proper class with a voice in the process.
“Interpath Advisory” sounds like a made-up BS name and indeed their website is 100% corporate BS. But clearly they had the “connections” enabling them to extract what was left at the bottom of the barrel.
The spectacularly late filing of the charges is hilarious and it amazes me that it worked. Well, one reportedly did while the other reportedly didn’t.
Peter wrote:
I was paying £750/hr plus VAT to a top-level accountant in 1991. £515/hr is not a “street corner accountant” but is “quite cheap”.These administrator vermin always line their pockets.
Since 1978, I have never seen unsecured creditors get as much as 1% payout.
It is sad, especially this not being widely known or used.
I recall a Scottish customer of mine going under back in 2007, my company was the second biggest creditor at the time hence I was offered a seat on the creditor’s committee; the biggest creditor was apparently the German mother company which was supplying them with raw materials and initially we were expecting to maybe get 8p on the pound. However I came across a document which showed underhand dealings from the mother company and raised it during a committee meeting. The net result: The mother company dropped all claims they had lodged, the payout suddenly rose significantly.
What they had done was closed one UK site (site A) using finance from the second site (Site B – which owed me the cash). Why they would allow site B to fund the payoffs to the employees of site A and these payments be declared as a “loan” from Site B to Site A even though site A was ceasing trading and could never hope to repay the funds was beyond me. Worse, they sold off assets of site A and claimed the payments received were then taken to repay debts owed to a German creditor instead of repaying Site B’s debt.
However, these debts were actually debts issued in the name of the mother company and had never been issued with respect site A, nor had they benefited anything other than the German head office. The financial director thought that dumb brits wouldn’t read through 320 pages of financial reports written in German on how they had financed the group….
When this came out, there was outrage at what this company was doing. Interestingly enough, removing the amount that the mother company was claiming and having the debt which Site B has loaned on behalf of Site A repaid, there was enough mass in there to pay off everyone’s debt and allow the company to continue trading. But – and here’s the BUT – once payment for administrators were calculated, the amount dropped to under 50%…..
A friend of mine had a terrible experience with administrators. His partner had a business go bust over a relatively small mortgage payment (which they couldn’t afford at the time) despite having large equity in the property. Little did they know, administrators charged over 300k for a simple liquidation of a 600k property, which happened to be almost exactly the equity. It’s really sad and should be illegal really. They could have easily sold the property and not gone bust…
Also this reminds me of Lehman brothers liquidators…… anyone fancy a guess how much they charged !
