The Times: Grant Thornton drawn into insolvency enquiry
Regulators look into liquidation payments
According to The Sunday Times, insolvency regulators are looking into claims that Grant Thornton were involved in the discretionary payment of £37k to a member of a creditors committee in return for a 'yes' vote.
You can read the article here, but then come back as we've dug into the details - here are the facts as we understand them..
In early 2006, Andrew Hosking and Tony Flynn, both of Grant Thornton, were appointed as administrators of Ovenden Colbert Printers Limited ("OCP"). Among the assets of OCP was £165k in a bank account which OCP's directors claimed was held in trust (for complicated reasons that aren't relevant here). The liquidators disputed this claim, but following extensive legal argument on both sides, agreed that the directors were entitled to £89k of the funds held in the trust account.
The liquidators then sought a resolution from the creditors' committee authorising the release of these funds. One of the three members of the committee, former director Stan Ovenden, objected to the payment. The company directors then drew up an agreement with Mr Ovenden stating that they would pay him £37k from the trust monies they received if he voted through the release of the funds. This was apparently a commercial decision taken to avoid the incursion of further significant legal fees battling over the entitlement to the trust monies.
Grant Thornton were drawn into this issue because instead of transferring £89k to the directors, the firm (on the instructions of the directors) released the trust monies in two transfers : £37k to Mr Ovenden, and the balance to the directors.
The Sunday Times:
"The agreement, seen by The Sunday Times, also placed other possibly illegal demands on Ovenden as a member of the creditors’ committee. It required him to stop asking further questions about a range of matters including directors’ loans, claims of trading while insolvent and a £1.3m payout from an earlier liquidation.
"The cash-for-vote agreement also required that Ovenden sack his lawyers and Griffins and that he stop suggesting there was any conflict of interest in Grant Thornton’s role."
We haven't seen the agreement, so we can't add anything here. But from the above it seems that Griffins were advising Mr Ovenden at the time of his agreement to receive the alleged bribe. Fast forward three years and Griffins have been installed as liquidator by the High Court and have instigated an investigation into that same payment.
So is this corruption? As any litigator will confirm, there's a fine line between a commercial settlement and bribery. Is it acceptable for a member of the creditors' committee to receive funds as a result of a decision he makes?
UPDATE: We have received the following statement from Grant Thornton:
We are aware of the article that appeared in the Sunday Times (online) on 20 December 2009.
Andrew Hosking was appointed, together with Anthony Flynn, of Grant Thornton UK LLP ("GTUK"), as administrator of Ovenden Colbert Printers Limited ("OCP") on 6 April 2006. Mr. Hosking was subsequently appointed liquidator on 14 March 2007. After a final meeting of creditors on 9 January 2009, Mr. Hosking applied for and obtained his release as liquidator from the Secretary of State on 1 September 2009. Mr. Hosking was not made aware of, and was not a party to, Mr. Ovenden's application to court of March 2009 when Mr. Hunt was appointed as liquidator of OCP.
The Department for Business, Enterprise or Regulatory Reform ("BERR") has not informed us of any allegations or investigations into the administration or liquidation of OCP.
We are aware that Mr Hunt made a complaint to Mr Hosking's licensing body, the Insolvency Practitioner's Association, in July 2009. The IPA are currently investigating that complaint. Mr Hosking and GTUK have, following a full consideration and internal investigation of the complaint, responded comprehensively to the complaint. GTUK and Mr Hosking entirely reject the complaints and allegations made. They are entirely without foundation.
Comments What do you think?
Anaonymous | 17:27 21 December 2009
And what is he doing taking appointment as liquidator at the behest of a man apparently accused of receiving a bribe: "it seems that Griffins were advising Mr Ovenden at the time of his agreement to receive the alleged bribe."?
There is a rather nasty smell to this.
anonymous | 00:37 22 December 2009
anonymous | 00:55 22 December 2009
(ii) following legal advice the claimants and the Administrators agree
that a figure of £89K should be released. Hoever, Ovenden, also a Director, and member of the Creditors' committee - ever heard of a conflict of interest? objects. The other Directors(beneficiaries) agree to pay him £37K and authorise GT to do so out of their agreed entitlement.
What have GT done wrong? absolutely nothing.
Where is the need for the apointment of a new necessity to appoint a Liquidator and what is there to investigate except to create unnecessary fees for the Liquidator.
Unless the facts are vastly different I cannot see the need for the BERR to spend our money on red herrings. Are they doing anything about the real failures engineered by crooked Directors? I wonder but doubt it.
Stephen Hunt | 06:19 22 December 2009
As for the question posed in this article, I would suggest that you look at Rule 4.170 for guidance on payments to members of a committee. This sets out the legal position for a liquidator.
Many thanks also to the anonymous comment about Yearwood-Grazette. It gives me the opportunity to correct the Recovery magazine article.
The outcome of the case is now well-known. What is unfortunate is that the approach I adopted (which was intended to ensure that the costs burden on Mr Yearwood-Grazette did not increase unduly) resulted in the Court finding that I had provided insufficient information to comply with the Practice Direction and that the total amount he was seeking in fees was, therefore, unjustified. The judgments provide useful clarification of the information that the Courts require from office holders on cost assessment hearings.
Shortly after the decision of Proudman J, an article appeared in Recovery Magazine about Yearwood-Grazette titled "Officeholders' Remuneration: a cautionary tale". Whilst no mention is made of this in the article, the article was written by Mr Cory Bebb and Mr Edward Cumming the solicitor and barrister who represented Mr Yearwood-Grazette for the purposes of my application. Messrs Bebb and Cumming have used the judgments to support the content of the article but have a wider knowledge of the background which led to the application. There are certain statements made by Messrs Bebb and Cumming in their article which I wish to clarify:
“Mr Yearwood-Grazette promptly offered to arrange for the only two bankruptcy debts, in a total sum of £11,858, to be cleared forthwith as he wished to put the bankruptcy behind him."
Mr Yearwood-Grazette in fact disputed the level of his main debt and sought to oppose the placing of a restriction on his property. Whilst the Court found that Mr Yearwood-Grazette had informed me that he wanted to settle his debts so that he could put the bankruptcy behind him, it was not suggested that they would be cleared forthwith. In fact, it was not until June 2005 that Mr Yearwood-Grazette reached a settlement with HMRC.
“Mr Hunt estimated that on this basis his remuneration should be ‘no more than £2,100 including VAT."
My professional fees were in fact £1,314 in January 2005 (exclusive of VAT and disbursements). The estimate of costs provided at that time was based on the debts to the bankruptcy being settled in full and promptly. They were not.
“Mr Yearwood-Grazette cleared both the debts by June 2005 as promised.”
This is apparently so but Mr Yearwood-Grazette did not inform me that both debts had been settled. Whilst Mr Yearwood-Grazette had indicated his intention to settle the debts he had not promised to do so. He disputed tha amount of tax claimed, saying that he had been in prison at the time covered by some of the assessments.
"By this time he sought more than £10,000 in remuneration and expenses to bring the bankruptcy to an end, which included time-cost charges for the period between December 2005 and 4 April 2006 for what was recorded on his time sheet as a file review and two annual reviews, which took place within a month of each other, as well as various letters.”
The article omits to record the fact that Proudman J had made it clear in her judgment that the figure of £10,000 included the costs of annulment proceedings and also the Secretary of State's costs. My fees at this stage had risen to only £2,370.43, and this included only a single file review in anticipation of the bankruptcy being brought to an end. Messrs Bebb and Cumming also do not make it clear that my costs for dealing with the bankruptcy were not significantly more than the sums originally quoted and that the costs that were later disallowed were in fact those that were incurred by me in dealing with the dispute over fees and commencing possession proceedings.
I would prefer to urge you to read the subsequent case of Freeburn v Hunt, another challenge to my fees brought by the same solicitor as in the Yearwood case. In that case I "wholly succeeded" and my remuneration was allowed in full. This case is fully and comprehensively argued and is a more thorough examination of my time recording systems. As the commentator points out, I have to work harder than most to ensure I never make a mistake.
Louise Middleton | 08:53 22 December 2009
Ummmm guys.. it's been the Business, Innovation and Skills (BIS) for quite sometime now. No wonder you haven't heard from BERR- they no longer exist!
A good sign to suggest GT are ahead of their game..
LAUGHABLE.
Golden Nuggett | 09:33 22 December 2009
Anon | 10:43 22 December 2009
Stephen Hunt | 11:48 22 December 2009
Many thanks for the offer to remove the libellous comments. I am however happy for them to remain. This is not a case that will be decided in the media but any discussion has a value - and I have been accused of much worse!
Anonymous | 12:25 22 December 2009
Anon | 12:45 22 December 2009
Anonymous | 13:05 22 December 2009
Anonymous | 18:20 22 December 2009
BUT lets do it properly. If Mr Hunt has a case he should bring it. Mud slinging in the media brings the profession into disrepute and then he is as bad as those he purports to pursue.
Why has he gone to the media with innuendo rather than going to court with a properly argued case? Self publicity?
IP | 13:39 23 December 2009
It also sounds like Hunt has brought his case to court and hence the abuse against him. Looks to me like he is the one being subjected to innuendo in the media!
Anonymous | 19:21 28 January 2010
Stephen Hunt | 19:53 28 January 2010
Anonymous | 22:15 3 February 2010
K Heath | 22:21 3 February 2010
Anonymous | 23:02 3 February 2010
Those of us who think its time that dirty IP s among us are caught will think its good that something is being done. I am sick of seeing IP s get together and conspire in what amounts to theft and then pat each other on the back. This site is public and readers will see that IPs are outraged that anyone dares to question their right to steal. I am anon because you would gang up on me too. Why are you all anonymous in making your accusations against Hunt? Are you ones he has sued too? I hope so. There are a lot of crooked Ips out there and you need taking down.
K Heath | 23:11 3 February 2010
Stephen Hunt | 07:53 4 February 2010
I don't think a website is the place to deal with any allegations, either by me or against me. That is why I cannot comment about this case.
I am regulated by the ICAEW so anyone who has a complaint regarding my conduct may make their representations to them. On the basis of the recent comments about joint appointments and conflict it would seem to me that Grant Thornton would be the first to raise this if they thought it an issue and they do not need anonymous postings to make the point for them.
I am very aware of the issues of conflict that could arise in any insolvency and have extensive procedures for considering and dealing with them.
As for the last posting about my hands being clean, this is not the first time this angle has been run. David Nisbet of Casson Beckman & Partners put an ad in Private Eye many years ago asking people to send him any dirt that they might have on me. I put a copy in my press file in reception and as far as I know he has yet to receive a reply. That aside, it is an odd point to make. Is an IP only allowed to investigate anyone if they have done nothing wrong themselves? That is a very high test which I would suspect that I would fail several times a day. Can you imagine a director running that argument in court? "The liquidator has a conflict so I am not guilty of wrongful trading."
Damon | 15:05 11 February 2010
who knows maybee they will be the next bill gates .
in the mean time those of you looking for a grant thornton boat vist wyles hardy co its up for grabs!!!!!!!!!
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